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Profitability Ratios East Point Retail, Inc. sells apparel through company-owned retail stores. Recent financial information for East Point follows (in thousands): Net income (loss)
Profitability Ratios East Point Retail, Inc. sells apparel through company-owned retail stores. Recent financial information for East Point follows (in thousands): Net income (loss) Interest expense Fiscal Year 3 Fiscal Year 2 $150,900 3,100 $(77,700) 11,600 Fiscal Year 3 Fiscal Year 2 Fiscal Year 1 Total assets (at end of fiscal year) Total stockholders' equity (at end of fiscal year) $1,315,416 976,981 $1,251,250 957,635 $1,098,750 695,557 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 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. If required, use a minus sign to indicate a negative return on stockholders' equity. Fiscal Year 3 % Fiscal Year 2 % c. In Fiscal Year 3, the return on stockholders' equity is leverage. the return on total assets due to the use of
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