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)	$140,900		$(72,600)
Interest expense	2,900		10,800
	Fiscal Year 3		Fiscal Year 2		Fiscal Year 1
Total assets (at end of fiscal year)	$1,637,722		$1,557,834		$1,368,482
Total stockholders' equity (at end of fiscal year)	1,185,909		1,162,425		854,241

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 %
Fiscal Year 2	fill in the blank %

c. In Fiscal Year 3, the return on stockholders' equity is

greater thanless than

the return on total assets due to the

positivenegative

use of leverage.