1.

East Point Retail, Inc., sells apparel through company-owned retail stores. Financial information for East Point follows (in thousands):

Line Item Description	Fiscal Year 3	Fiscal Year 2
Net income	$135,900	$69,900
Interest expense	2,800	10,500

Line Item Description	Fiscal Year 3	Fiscal Year 2	Fiscal Year 1
Total assets (at end of fiscal year)	$2,409,618	$2,292,076	$2,053,870
Total stockholders' equity (at end of fiscal year)	940,130	921,514	667,122

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 your answers to one decimal place.

Line Item Description	Percentage
Fiscal Year 3
Fiscal Year 2

b. Determine the return on stockholders' equity for East Point for fiscal Years 2 and 3. Round your answers to one decimal place.

Line Item Description	Percentage
Fiscal Year 3
Fiscal Year 2	8.8

2.

The balance sheet for Garcon Inc. at the end of the current fiscal year indicated the following:

Line Item Description	Amount
Bonds payable, 8%	$5,000,000
Preferred $4 stock, $50 par	2,500,000
Common stock, $10 par	5,000,000

Income before income tax expense was $3,000,000, and income taxes were $1,200,000 for the current year. Cash dividends paid on common stock during the current year totaled $1,200,000. The common stock was selling for $32 per share at the end of the year.

Determine each of the following. Round to one decimal place, except for dollar amounts which should be rounded to the nearest whole cent. Use the rounded answers for subsequent requirements, if required.

Line Item Description	Ratio
a. Times interest earned ratio
b. Earnings per share on common stock
c. Price-earnings ratio
d. Dividends per share of common stock
e. Dividend yield

3.

Earnings per share, price-earnings ratio, dividend yield

The following information was taken from the financial statements of Tolbert Inc. for December 31 of the current fiscal year:

Line Item Description	Amount
Common stock, $20 par (no change during the year)	$10,000,000
Preferred $4 stock, $40 par (no change during the year)	2,500,000

The net income was $1,750,000 and the declared dividends on the common stock were $1,125,000 for the current year. The market price of the common stock is $45 per share.

For the common stock, determine (a) the earnings per share, (b) the price-earnings ratio, (c) the dividends per share, and (d) the dividend yield. Round to one decimal place, except for dollar amounts which should be rounded to two decimal places.

Line Item Description	Answer
a. Earnings per Share
b. Price-Earnings Ratio
c. Dividends per Share
d. Dividend Yield

4.

Horizontal analysis of income statement

For 20Y2, Macklin Inc. reported a significant decrease in net income. At the end of the year, John Mayer, the president, is presented with the following condensed comparative income statement:

Macklin Inc. Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1

Line Item Description	20Y2	20Y1
Sales	$355,018	$313,000
Cost of goods sold	(256,000)	(200,000)
Gross profit	$99,018	$113,000
Selling expenses	$(35,100)	$(26,000)
Administrative expenses	(21,280)	(17,000)
Total operating expenses	$(56,380)	$(43,000)
Operating income	$42,638	$70,000
Other revenue	1,620	1,300
Income before income tax expense	$44,258	$71,300
Income tax expense	(12,400)	(21,400)
Net income	$31,858	$49,900

Required:

Question Content Area

1. Prepare a comparative income statement with horizontal analysis for the two-year period, using 20Y1 as the base year. Use the minus sign to indicate a decrease in the "Increase/(Decrease)" columns. If required, round percentages to one decimal place.

Macklin Inc. Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1

Line Item Description	20Y2	20Y1	Increase/ (Decrease) Amount	Increase/ (Decrease) Percent
Sales	$355,018	$313,000
Cost of goods sold	(256,000)	(200,000)
Gross profit	$99,018	$113,000
Selling expenses	$(35,100)	$(26,000)
Administrative expenses	(21,280)	(17,000)
Total operating expenses	$(56,380)	$(43,000)
Operating income	$42,638	$70,000
Other revenue	1,620	1,300
Income before income tax expense	$44,258	$71,300
Income tax expense	(12,400)	(21,400)
Net income	$31,858	$49,900