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Chapter 14 Profitability Ratios East Point Retail, Inc., sells professional women's apparel through company-owned retail stores. Recent financial information for East Point is provided below (all numbers in thousands). Fiscal Year 3 Fiscal Year 2 Net income Interest expense $148,200 3,000 $76,300 11,400 Fiscal Year 3 Fiscal Year 2 Fiscal Year 1 Tatal assets (at end of fiscal year) Total stockholders' equity (at end of fiscal year) $2,354,308 1,257,832 $2,268,000 1,232,924 $2,010,048 916,372 Assume the apparel industry average return on total assets is 8.0%, and the average return on stockholders' equity is 15.0% for the year ended April 2, Year 1 a. Determine the return on total assets for East Point for fiscal Years 2 and 3. Round to one decimal place Fiscal Year 3 Fiscal Year 2 b. Determine the return on stockholders' equity for East Point for fiscal years 2 and 3. Round to one decimal place. Fiscal Year 3 Fiscal Year 2 The retum en stockholders' equity is greater than the retum on total assets due to the positive d. During fiscal Year 3, East Point's results were weak compared to the industry average. The return equity was less than the industry average. These relationships suggest that East Point has less use of leverage on total essets for East Peint was less leverage than the industry, on average than the industry average. The return on stockholders Check My Work Assignment Score Previous Next >

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