Net income Interest expense $146,200 3,000 Fiscal Year 2 $3,398,445 $3,232,667 $2,945,905 1,220,347 1,196,181 866,833 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 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 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 Point was compared to the industry average. The return on total assets for East than the industry average. The return on stockholders' equity was than the industry average. These relationships suggest that East Point has leverage than the industry, on average. Total assets (at end of fiscal year) Total stockholders' equity (at end of fiscal year) 23.1 % % $75,300 11,200 % % Fiscal Year 3 Fiscal Year 1

Net income Interest expense $146,200 3,000 Fiscal Year 2 $3,398,445 $3,232,667 $2,945,905 1,220,347 1,196,181 866,833 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 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 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 Point was compared to the industry average. The return on total assets for East than the industry average. The return on stockholders' equity was than the industry average. These relationships suggest that East Point has leverage than the industry, on average. Total assets (at end of fiscal year) Total stockholders' equity (at end of fiscal year) 23.1 % % $75,300 11,200 % % Fiscal Year 3 Fiscal Year 1

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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