These are condensed balance sheet and income statement data for Los ColinasPerform ratio analysisCorporation:

Additional information: \(\square\)1. The market price of Los Colinas's common stock was \(\$ 5.00, \$ 4.50\), and \(\$ 2.30\) for 1996 ,1997, and 1998, respectively.2. All dividends were paid in cash.3. On July 1, 1997, 4,000 shares of common stock were issued, and on July 1, 1998, 6,000shares were issued.Instructions

(a) Compute the following ratios for 1997 and 1998:(1) Profit margin(5) Price-earnings(2) Gross profit rate(6) Payout(3) Asset turnover(7) Debt to total assets(4) Earnings per share

(b) Based on the ratios calculated, discuss briefly the improvement or lack thereof in thefinancial position and operating results from 1997 to 1998 of Los Colinas Corpora-tion.

Transcribed Image Text:

LOS COLINAS CORPORATION Balance Sheet December 31 1998 1997 Cash $ 40,000 $ 24,000 1996 $ 20,000 Receivables (net) 70,000 45,000 48,000 Other current assets 80,000 75,000 62,000 Investments 90,000 70,000 50,000 Plant and equipment (net) 450,000 400,000 360,000 $730,000 $614,000 $540,000 Current liabilities $ 98,000 $ 75,000 $ 70,000 Long-term debt 97,000 75,000 65,000 Common stock, $10 par 400,000 340,000 300,000 Retained earnings 135,000 124,000 105,000 $730,000 $614,000 $540,000