ProfitabilityRatios

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 3Fiscal Year 2Net income$145,600$75,000Interest expense3,00011,200Fiscal Year 3Fiscal Year 2Fiscal Year 1Total assets (at end of fiscal year)$2,273,358$2,162,462$1,942,300Total stockholders' equity (at end of fiscal year)1,148,8751,126,125821,927

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 3fill in the blank 1

%Fiscal Year 2fill 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 3fill in the blank 3

%Fiscal Year 2fill in the blank 4

%

c.The return on stockholders' equity is

the return on total assets due to the

use of leverage.

d.During fiscal Year 3, East Point's results were

compared to the industry average. The return on total assets for East Point was

than the industry average. The return on stockholders' equity was

than the industry average. These relationships suggest that East Point has

leverage than the industry, on average.