Triangle company has acquired a controlling interest in Golden Company. After a thorough study, Triangle Company noted that the Golden Company was too conservatively managed and had thought that with an aggressive leadership, the sales volume, the rate of return on sales and the rate of return for the stockholders can be improved. Accordingly, the company had invested heavily in modern equipment and has promoted additional sales volume. The new management has been in control for the last three years and hereunder are the comparative data based on the annual report submitted under the old and new management. Old Management New Management Current assets P 640,000 P 900,000 Plant assets, net of depreciation 335,000 1,940,000 Total assets P 975,000 P 2,870,000 Current liabilities P 185,000 P 623,500 Long-term notes payable - 1,000,000 Mortgage payable 75,000 250,000 Capital stock 250,000 250,000 Retained earnings 465,000 746,500 Total equities P 975,000 P 2,870,000 Net sales P 1,610,000 P 5,620,000 Net income P 87,000 P 483,000 As an outside consultant, you have been requested by Triangle to make a comparison between conditions now and conditions under the old management. Your comparison will either support or not support a request for additional loans. Support your evaluation by computing the following relationships from both sets of data: 1. Rate of return on net sales. 2. Rate of return on assets. 3. Rate on return on stockholders’ equity. 4. Percentage of debt-to-equity structure.

 Triangle company has acquired a controlling interest in Golden Company. After a
thorough study, Triangle Company noted that the Golden Company was too
conservatively managed and had thought that with an aggressive leadership, the
sales volume, the rate of return on sales and the rate of return for the
stockholders can be improved. Accordingly, the company had invested heavily in
modern equipment and has promoted additional sales volume.
The new management has been in control for the last three years and hereunder
are the comparative data based on the annual report submitted under the old
and new management.

As an outside consultant, you have been requested by Triangle to make a
comparison between conditions now and conditions under the old management.
Your comparison will either support or not support a request for additional loans.
Support your evaluation by computing the following relationships from both sets
of data:
1. Rate of return on net sales.
2. Rate of return on assets.
3. Rate on return on stockholders’ equity.
4. Percentage of debt-to-equity structure.