Profitability ratios Obj. 5 Ralph Lauren Corporation (RL) sells apparel through company-owned retail stores. Financial information for Ralph Lauren follows (in thousands):

Fiscal Year 3 Fiscal Year 2 Net income $396,400 $702,200 Interest expense 21,000 16,700 Fiscal Year 3 Fiscal Year 2 Fiscal Year 1 Total assets (at end of fiscal year) $6,213,100 $6,106,000 $6,088,000 Total stockholders’ equity (at end of fiscal year) 3,743,500 3,891,000 4,034,000 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 Ralph Lauren for fiscal years 2 and 3. Round percentages to one decimal place.

b. Determine the return on stockholders’ equity for Ralph Lauren for fiscal years 2 and 3. Round percentages to one decimal place.

c. Evaluate the two-year trend for the profitability ratios determined in

(a) and (b).

d. Evaluate Ralph Lauren’s profit performance relative to the industry.

AppendixLO1