Net income Interest expense Fiscal Year 3 $146,200 3,000 Fiscal Year 3 Fiscal Year 2 $3,398,445 $3,232,667 $2,945,905 1,220,347 1,196,181 866,833 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 endea 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 23.1 % Fiscal Year 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 Fiscal Year 2 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. Total assets (at end of fiscal year) Total stockholders' equity (at end of fiscal year) % Fiscal Year 2 $75,300 11,200 % % Fiscal Year 1
Net income Interest expense Fiscal Year 3 $146,200 3,000 Fiscal Year 3 Fiscal Year 2 $3,398,445 $3,232,667 $2,945,905 1,220,347 1,196,181 866,833 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 endea 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 23.1 % Fiscal Year 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 Fiscal Year 2 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. Total assets (at end of fiscal year) Total stockholders' equity (at end of fiscal year) % Fiscal Year 2 $75,300 11,200 % % Fiscal Year 1
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Home
om/ilm/takeAssignment/takeAssignmentMain.do?invo... A
Net income
X CengageNOWV2 | Online teachin X +
Interest expense
Fiscal Year 3
$146,200
3,000
anteay
M
Fiscal Year 3
Fiscal Year 2
Fiscal Year 1
Total assets (at end of fiscal year)
$3,232,667
$2,945,905
$3,398,445
1,220,347
1,196,181
866,833
Total stockholders' equity (at end of fiscal year)
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
Fiscal Year 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
Fiscal Year 2
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.
23.1 %
%
%
Fiscal Year 2
$75,300
11,200
%
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Expert Solution
Step 1
In order to determine the return on stockholders' equity, the net income available to stockholders are required to be divided by the average stockholders' equity.
Average stockholders' equity is computed by adding the beginning stockholders equity and ending stockholders equity and then divide it by 2.
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