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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 $162,300 $83,500 3,300 12,500 Fiscal Year 3 Fiscal Year 2 Fiscal Year 1 Total assets (at end of fiscal year) Total stockholders' equity (at end of fiscal year) $3,202,641 1,154,388 $3,046,415 1,131,528 $2,771,767 833,178 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 5.219 X % 2.5 X % b. Determine the return on stockholders' equity for East Point for fiscal Years 2 and 3. Round to one decimal place. Fiscal Year 3 14.10 X % Fiscal Year 2 0.08 X % c. The return on stockholders' equity is greater than d. During fiscal Year 3, East Point's results were weak stockholders' equity was less the return on total assets due to the positive use of leverage. compared to the industry average. The return on total assets for East Point was less than the industry average. These relationships suggest that East Point has less than the industry average. The return leverage than the industry, on average. Feedback ▼ Check My Work a. Divide the sum of net income and interest expense by average total assets. Average total assets = (Beginning total assets + Ending total assets) + 2. b. Divide net income by average total stockholders' equity. Average total stockholders' equity (Beginning total stockholders' equity+ Ending total stockholders' equity) + 2. c. Consider how leverage is being used. Consider the relationship of the accounts involved. d. Consider how leverage is being used. Consider the relationship of the accounts involved. Previous

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 $162,300 $83,500 3,300 12,500 Fiscal Year 3 Fiscal Year 2 Fiscal Year 1 Total assets (at end of fiscal year) Total stockholders' equity (at end of fiscal year) $3,202,641 1,154,388 $3,046,415 1,131,528 $2,771,767 833,178 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 5.219 X % 2.5 X % b. Determine the return on stockholders' equity for East Point for fiscal Years 2 and 3. Round to one decimal place. Fiscal Year 3 14.10 X % Fiscal Year 2 0.08 X % c. The return on stockholders' equity is greater than d. During fiscal Year 3, East Point's results were weak stockholders' equity was less the return on total assets due to the positive use of leverage. compared to the industry average. The return on total assets for East Point was less than the industry average. These relationships suggest that East Point has less than the industry average. The return leverage than the industry, on average. Feedback ▼ Check My Work a. Divide the sum of net income and interest expense by average total assets. Average total assets = (Beginning total assets + Ending total assets) + 2. b. Divide net income by average total stockholders' equity. Average total stockholders' equity (Beginning total stockholders' equity+ Ending total stockholders' equity) + 2. c. Consider how leverage is being used. Consider the relationship of the accounts involved. d. Consider how leverage is being used. Consider the relationship of the accounts involved. Previous

FINANCIAL ACCOUNTING
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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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 $162,300 $83,500 3,300 12,500 Fiscal Year 3 Fiscal Year 2 Fiscal Year 1 Total assets (at end of fiscal year) Total stockholders' equity (at end of fiscal year) $3,202,641 1,154,388 $3,046,415 1,131,528 $2,771,767 833,178 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 5.219 X % 2.5 X % b. Determine the return on stockholders' equity for East Point for fiscal Years 2 and 3. Round to one decimal place. Fiscal Year 3 14.10 X % Fiscal Year 2 0.08 X % c. The return on stockholders' equity is greater than d. During fiscal Year 3, East Point's results were weak stockholders' equity was less the return on total assets due to the positive use of leverage. compared to the industry average. The return on total assets for East Point was less than the industry average. These relationships suggest that East Point has less than the industry average. The return leverage than the industry, on average. Feedback ▼ Check My Work a. Divide the sum of net income and interest expense by average total assets. Average total assets = (Beginning total assets + Ending total assets) + 2. b. Divide net income by average total stockholders' equity. Average total stockholders' equity (Beginning total stockholders' equity+ Ending total stockholders' equity) + 2. c. Consider how leverage is being used. Consider the relationship of the accounts involved. d. Consider how leverage is being used. Consider the relationship of the accounts involved. Previous
Transcribed Image Text: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 $162,300 $83,500 3,300 12,500 Fiscal Year 3 Fiscal Year 2 Fiscal Year 1 Total assets (at end of fiscal year) Total stockholders' equity (at end of fiscal year) $3,202,641 1,154,388 $3,046,415 1,131,528 $2,771,767 833,178 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 5.219 X % 2.5 X % b. Determine the return on stockholders' equity for East Point for fiscal Years 2 and 3. Round to one decimal place. Fiscal Year 3 14.10 X % Fiscal Year 2 0.08 X % c. The return on stockholders' equity is greater than d. During fiscal Year 3, East Point's results were weak stockholders' equity was less the return on total assets due to the positive use of leverage. compared to the industry average. The return on total assets for East Point was less than the industry average. These relationships suggest that East Point has less than the industry average. The return leverage than the industry, on average. Feedback ▼ Check My Work a. Divide the sum of net income and interest expense by average total assets. Average total assets = (Beginning total assets + Ending total assets) + 2. b. Divide net income by average total stockholders' equity. Average total stockholders' equity (Beginning total stockholders' equity+ Ending total stockholders' equity) + 2. c. Consider how leverage is being used. Consider the relationship of the accounts involved. d. Consider how leverage is being used. Consider the relationship of the accounts involved. Previous
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