Triangle company has acquired a controlling interest in Golden Company. After athorough study, Triangle Company noted that the Golden Company was tooconservatively managed and had thought that with an aggressive leadership, thesales volume, the rate of return on sales and the rate of return for thestockholders can be improved. Accordingly, the company had invested heavily inmodern equipment and has promoted additional sales volume.The new management has been in control for the last three years and hereunderare the comparative data based on the annual report submitted under the oldand new management.OldManagementNewManagementCurrent assetsP 640,000P 900,000Plant assets, net of depreciation335,0001,940,000Total assetsP 975,000P 2,870,000Current liabilitiesP 185,000P 623,500Long-term notes payable-1,000,000Mortgage payable75,000250,000Capital stock250,000250,000Retained earnings465,000746,500Total equitiesP 975,000P 2,870,000Net salesP 1,610,000P 5,620,000Net incomeP 87,000P 483,000As an outside consultant, you have been requested by Triangle to make acomparison 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 setsof 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. Chapter_13.pdf - Foxit ReaderFileHomeCommentFill & SignViewFormProtectShareHelpTell me what you want to do..a FindStartChapter 13.pdfesign PDF Docs5. Triangle company has acquired a controlling interest in Golden Company. After athorough study. Triangle Company noted that the Golden Company was tooconservatively managed and had thought that with an aggressive leadership, thesales volume, the rate of return on sales and the rate of return for thestockholders can be improved. Accordingly, the company had invested heavily inmodern equipment and has promoted additional sales volume.The new management has been in control for the last three years and hereunderare the comparative data based on the annual report submitted under the oldand new management.OldManagement640,000335,000975,000NewManagementPCurrent assetsPlant assets, net of depreciationTotal assetsP900,0001,940,0002,870,000PCurrent liabilitiesLong-term notes payableMortgage payableCapital stockRetained earningsTotal equities185,000P623,5001,000,000250,000250,000746,5002,870,00075,000250,000465.000P.975,000P.Net sales| Net income1,610.00087.0005.620.000P483,000As an outside consultant, you have been requested by Triangle to make acomparison between conditions now and conditions under the old management.Your comparison will either support or not support a request for additional loansSupport your evaluation by computing the following relationships from both setsof 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.1 5/ 3971.75%

Formulas :- 1) Rate of return on net sales = Net income / net sales 2) Rate of return on assets =…

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.

Fundamentals Of Financial Management, Concise Edition (mindtap Course List)

10th Edition

ISBN:9781337902571

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter14: Distributions To Shareholders:dividends And Share Repurchases

Section: Chapter Questions

Problem 2TCL

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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.

Chapter_13.pdf - Foxit Reader
File
Home
Comment
Fill & Sign
View
Form
Protect
Share
Help
Tell me what you want to do..
a Find
Start
Chapter 13.pdf
esign PDF Docs
5. 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
640,000
335,000
975,000
New
Management
P
Current assets
Plant assets, net of depreciation
Total assets
P
900,000
1,940,000
2,870,000
P
Current liabilities
Long-term notes payable
Mortgage payable
Capital stock
Retained earnings
Total equities
185,000
P
623,500
1,000,000
250,000
250,000
746,500
2,870,000
75,000
250,000
465.000
P.
975,000
P.
Net sales
| Net income
1,610.000
87.000
5.620.000
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.
1 5/ 39
71.75%

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