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 $154,600 $79,600 Interest expense 3,200 11,900 Fiscal Year 3 Fiscal Year 2 Fiscal Year 1 Total assets (at end of fiscal year) $1,633,787 $1,554,091 $1,397,521 Total stockholders' equity (at end of fiscal year) 1,346,087 1,319,431 954,855 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 9.9 % Fiscal Year 2 X % 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 11.6 % Fiscal Year 2 X % C. The return on stockholders' equity is greater than the return on total assets due to the positive use of leverage. d. During fiscal Year 3, East Point's results were strong compared to the industry average. These relationships suggest that East Point's has more leverage than the industry, on average. Feedback Check My Work a. Divide the sum of net income plus 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