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 $155,800   $80,200     Interest expense 3,200   12,000       Fiscal Year 3 Fiscal Year 2 Fiscal Year 1 Total assets (at end of fiscal year) $2,116,558   $2,013,312   $1,749,954   Total stockholders' equity (at end of fiscal year) 1,157,044   1,134,132   821,966   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 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 to one decimal place. 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     compared to the industry average. The return on total assets for East Point was     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.

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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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 $155,800   $80,200    
    Interest expense 3,200   12,000    
      Fiscal Year 3 Fiscal Year 2 Fiscal Year 1
    Total assets (at end of fiscal year) $2,116,558   $2,013,312   $1,749,954  
    Total stockholders' equity (at end of fiscal year) 1,157,044   1,134,132   821,966  

    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 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 to one decimal place.

    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 

     

     compared to the industry average. The return on total assets for East Point was 

     

     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.

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