East Point Retail, Inc., sells apparel through company-owned retail stores. Financial information for East Point follows (in thousands): Line Item Description Fiscal Year 3 Fiscal Year 2 Net income $143,300 $73,800 Interest expense 2,900 11,000 Line Item Description Fiscal Year 3 Fiscal Year 2 Fiscal Year 1 Total assets (at end of fiscal year) $3,058,265 $2,909,081 $2,561,887 Total stockholders' equity (at end of fiscal year) 1,104,832 1,082,954 785,400 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 3. a. Determine the return on total assets for East Point for fiscal Years 2 and 3. Round your answers to one decimal place. Line Item Description Percentage Fiscal Year 3 fill in the blank 1 % Fiscal Year 2 fill in the blank 2 % b. Determine the return on stockholders' equity for East Point for fiscal Years 2 and 3. Round your answers to one decimal place. Line Item Description Percentage Fiscal Year 3 fill in the blank 3 % Fiscal Year 2 fill in the blank 4 % c. The return on stockholders' equity is the return on total assets due to the use of leverage. d. During fiscal Year 3, East Point’s results were fill in the blank 1 of 4 compared to the industry average. The return on total assets for East Point was fill in the blank 2 of 4 than the industry average. The return on stockholders’ equity was fill in the blank 3 of 4 than the industry average. These relationships suggest that East Point has fill in the blank 4 of 4
East Point Retail, Inc., sells apparel through company-owned retail stores. Financial information for East Point follows (in thousands):
Line Item Description | Fiscal Year 3 | Fiscal Year 2 |
---|---|---|
Net income | $143,300 | $73,800 |
Interest expense | 2,900 | 11,000 |
Line Item Description | Fiscal Year 3 | Fiscal Year 2 | Fiscal Year 1 |
---|---|---|---|
Total assets (at end of fiscal year) | $3,058,265 | $2,909,081 | $2,561,887 |
Total |
1,104,832 | 1,082,954 | 785,400 |
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 3.
a. Determine the return on total assets for East Point for fiscal Years 2 and 3. Round your answers to one decimal place.
Line Item Description | Percentage |
---|---|
Fiscal Year 3 | fill in the blank 1 % |
Fiscal Year 2 | fill in the blank 2 % |
b. Determine the return on stockholders' equity for East Point for fiscal Years 2 and 3. Round your answers to one decimal place.
Line Item Description | Percentage |
---|---|
Fiscal Year 3 | fill in the blank 3 % |
Fiscal Year 2 | fill in the blank 4 % |
c. The return on stockholders' equity is
the return on total assets due to the
use of leverage.
d. During fiscal Year 3, East Point’s results were fill in the blank 1 of 4
compared to the industry average. The return on total assets for East Point was fill in the blank 2 of 4
than the industry average. The return on stockholders’ equity was fill in the blank 3 of 4
than the industry average. These relationships suggest that East Point has fill in the blank 4 of 4
leverage than the industry, on average.
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