Question
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
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 $156,700 $80,600 Interest expense 3,200 12,100 Fiscal Year 3 Fiscal Year 2 Fiscal Year 1 Total assets (at end of fiscal year) $1,489,977 $1,417,295 $1,269,661 Total stockholders' equity (at end of fiscal year) 1,099,076 1,077,312 797,106 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. Fiscal Year 3 % Fiscal Year 2 % b. Determine the return on stockholders equity for East Point for fiscal Years 2 and 3. Round percentages to one decimal place. Fiscal Year 3 % Fiscal Year 2 % c. The return on stockholders' equity is the return on total assets due to the use of leverage. d. During fiscal Year 3, East Points results were compared to the industry average. These relationships suggest that East Points has leverage than th
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started