Profitability Ratios

East Point Retail, Inc., sells professional women's apparel through company-owned retail stores. Recent financial information for East Point is provided below (all numbers in thousands).

	Fiscal Year 3		Fiscal Year 2
Net income	$153,100		$78,800
Interest expense	3,100		11,800

	Fiscal Year 3		Fiscal Year 2		Fiscal Year 1
Total assets (at end of fiscal year)	$3,335,521		$3,172,813		$2,867,187
Total stockholders' equity (at end of fiscal year)	1,227,230		1,202,928		870,756

Assume the apparel industry average return on total assets is 8.0%, and the average return on stockholders equity is 15.0% for the year ended April 2, Year 3.

a. Determine the return on total assets for East Point for fiscal Years 2 and 3. Round to one decimal place.

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 to one decimal place.

Fiscal Year 3	fill in the blank 3 %
Fiscal Year 2	fill in the blank 4 %

Horizontal analysis of income statement

For 20Y2, McDade Company reported a decline in net income. At the end of the year, T. Burrows, the president, is presented with the following condensed comparative income statement:

McDade Company
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
	20Y2	20Y1
Sales	$ 16,800,000	$ 15,000,000
Cost of goods sold	(11,500,000)	(10,000,000)
Gross profit	$ 5,300,000	$ 5,000,000
Selling expenses	$ (1,770,000)	$ (1,500,000)
Administrative expenses	(1,220,000)	(1,000,000)
Total operating expenses	$ (2,990,000)	$ (2,500,000)
Operating income	$ 2,310,000	$ 2,500,000
Other revenue	256,950	225,000
Income before income tax expense	$ 2,566,950	$ 2,725,000
Income tax expense	(1,413,000)	(1,500,000)
Net income	$ 1,153,950	$ 1,225,000

1. Prepare a comparative income statement with horizontal analysis for the two-year period, using 20Y1 as the base year. Round percentages to one decimal place. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

McDade Company
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
			Increase/(Decrease)
	20Y2	20Y1	Amount	Percent
Sales	$fill in the blank 7dec26f2e057f95_1	$fill in the blank 7dec26f2e057f95_2	$fill in the blank 7dec26f2e057f95_3	fill in the blank 7dec26f2e057f95_4%
Cost of goods sold	fill in the blank 7dec26f2e057f95_5	fill in the blank 7dec26f2e057f95_6	fill in the blank 7dec26f2e057f95_7	fill in the blank 7dec26f2e057f95_8%
Gross profit	$fill in the blank 7dec26f2e057f95_9	$fill in the blank 7dec26f2e057f95_10	$fill in the blank 7dec26f2e057f95_11	fill in the blank 7dec26f2e057f95_12%
Selling expenses	$fill in the blank 7dec26f2e057f95_13	$fill in the blank 7dec26f2e057f95_14	$fill in the blank 7dec26f2e057f95_15	fill in the blank 7dec26f2e057f95_16%
Administrative expenses	fill in the blank 7dec26f2e057f95_17	fill in the blank 7dec26f2e057f95_18	fill in the blank 7dec26f2e057f95_19	fill in the blank 7dec26f2e057f95_20%
Total operating expenses	$fill in the blank 7dec26f2e057f95_21	$fill in the blank 7dec26f2e057f95_22	$fill in the blank 7dec26f2e057f95_23	fill in the blank 7dec26f2e057f95_24%
Operating income	$fill in the blank 7dec26f2e057f95_25	$fill in the blank 7dec26f2e057f95_26	$fill in the blank 7dec26f2e057f95_27	fill in the blank 7dec26f2e057f95_28%
Other revenue	fill in the blank 7dec26f2e057f95_29	fill in the blank 7dec26f2e057f95_30	fill in the blank 7dec26f2e057f95_31	fill in the blank 7dec26f2e057f95_32
Income before income tax expense	$fill in the blank 7dec26f2e057f95_33	$fill in the blank 7dec26f2e057f95_34	$fill in the blank 7dec26f2e057f95_35	fill in the blank 7dec26f2e057f95_36%
Income tax expense	fill in the blank 7dec26f2e057f95_37	fill in the blank 7dec26f2e057f95_38	fill in the blank 7dec26f2e057f95_39	fill in the blank 7dec26f2e057f95_40%
Net income	$fill in the blank 7dec26f2e057f95_41	$fill in the blank 7dec26f2e057f95_42	$fill in the blank 7dec26f2e057f95_43	fill in the blank 7dec26f2e057f95_44