Profitability Ratios East Point Retail, Inc. sells apparel through company-owned retail stores. Recent financial information for East Point follows (in thousands): Fiscal Year 3 Fiscal Year 2 Net income (loss) $146,000 $(75,200) Interest expense 3,000 11,200 Fiscal Year 3 Fiscal Year 2 Fiscal Year 1 Total assets (at end of fiscal year) $1,351,549 $1,285,619 $1,148,183 Total stockholders' equity (at end of fiscal year) 1,117,122 1,095,000 808,798 Assume the apparel industry average return on total assets is 5.0% and the average return on stockholders' equity is 8.0% for the year ended February 2, Year 3. a. Determine the return on total assets for East Point for fiscal Years 2 and 3. Round percentages to one decimal place. If required, use a minus sign to indicate a negative return on total assets. 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 percentages to one decimal place. If required, use a minus sign to indicate a negative return on stockholders' equity. Fiscal Year 3 fill in the blank 3% Fiscal Year 2 fill in the blank 4% c. In Fiscal Year 3, the return on stockholders' equity is the return on total assets due to the use of leverage.
Profitability Ratios East Point Retail, Inc. sells apparel through company-owned retail stores. Recent financial information for East Point follows (in thousands): Fiscal Year 3 Fiscal Year 2 Net income (loss) $146,000 $(75,200) Interest expense 3,000 11,200 Fiscal Year 3 Fiscal Year 2 Fiscal Year 1 Total assets (at end of fiscal year) $1,351,549 $1,285,619 $1,148,183 Total stockholders' equity (at end of fiscal year) 1,117,122 1,095,000 808,798 Assume the apparel industry average return on total assets is 5.0% and the average return on stockholders' equity is 8.0% for the year ended February 2, Year 3. a. Determine the return on total assets for East Point for fiscal Years 2 and 3. Round percentages to one decimal place. If required, use a minus sign to indicate a negative return on total assets. 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 percentages to one decimal place. If required, use a minus sign to indicate a negative return on stockholders' equity. Fiscal Year 3 fill in the blank 3% Fiscal Year 2 fill in the blank 4% c. In Fiscal Year 3, the return on stockholders' equity is the return on total assets due to the use of leverage.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Profitability Ratios
East Point Retail, Inc. sells apparel through company-owned retail stores. Recent financial information for East Point follows (in thousands):
Fiscal Year 3 Fiscal Year 2 Net income (loss) $146,000 $(75,200) Interest expense 3,000 11,200 Fiscal Year 3 Fiscal Year 2 Fiscal Year 1 Total assets (at end of fiscal year) $1,351,549 $1,285,619 $1,148,183 Total stockholders' equity (at end of fiscal year)1,117,122 1,095,000 808,798 Assume the apparel industry average
return on total assets is 5.0% and the averagereturn on stockholders' equity is 8.0% for the year ended February 2, Year 3.a. Determine the return on total assets for East Point for fiscal Years 2 and 3. Round percentages to one decimal place. If required, use a minus sign to indicate a negative return on total assets.
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 percentages to one decimal place. If required, use a minus sign to indicate a negative return on stockholders' equity.
Fiscal Year 3 fill in the blank 3% Fiscal Year 2 fill in the blank 4% c. In Fiscal Year 3, the return on stockholders' equity is
the return on total assets due to the
use of leverage.
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