Question
Profitability Ratios East Point Retail, Inc. sells apparel through company-owned retail stores. Recent financial information for East Point follows (in thousands): Fiscal Year 3 Fiscal
Profitability Ratios 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 (loss) $157,500 $(81,100) Interest expense 3,200 12,100 Fiscal Year 3 Fiscal Year 2 Fiscal Year 1 Total assets (at end of fiscal year) $1,830,195 $1,740,917 $1,529,259 Total stockholders' equity (at end of fiscal year) 1,371,337 1,344,181 972,961 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. If required, use a minus sign to indicate a negative return on total assets. 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 percentages to one decimal place. If required, use a minus sign to indicate a negative return on stockholders' equity. Fiscal Year 3 fill in the blank 3 % Fiscal Year 2 fill in the blank 4 % c. In Fiscal Year 3, the return on stockholders' equity is greater than the return on total assets due to the positive use of leverage.
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