Question

East Point, Inc., sells merchandise through company-owned retail stores and an Internet Website. Recent financial information for East Point is provided below (all numbers in millions).

Year 3 |
Year 2 |
|||||

Net income | $150,100 | $77,300 | ||||

Interest expense | 3,100 | 11,600 | ||||

Year 3 |
Year 2 |
Year 1 |
||||

Total assets | $2,013,206 | $1,915,000 | $1,713,572 | |||

Total stockholders' equity | 1,060,146 | 1,039,154 | 823,496 |

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

Year 3 | ? % |

Year 2 | ? % |

**b.** Determine the return on stockholders' equity
for East Point for the fiscal Years 2 and 3. **Round your
percentage answers to one decimal place.**

Year 3 | ? % |

Year 2 | ? % |

Answer #1

Profitability Metrics
East Point, Inc., sells merchandise through company-owned retail
stores and Internet Web sites. Recent financial information for
East Point is provided below (all numbers in millions).
Year 3
Year 2
Net income
$135,700
$69,900
Interest expense
2,800
10,400
Year 3
Year 2
Year 1
Total assets
$1,631,753
$1,552,155
$1,367,845
Total stockholders' equity
945,221
926,503
576,723
a. Determine the return on total assets for
East Point for the fiscal Years 2 and 3. Round your percentage
answers to one...

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
$157,300
$81,000
Interest expense
3,200
12,100
Fiscal Year 3
Fiscal Year 2
Fiscal Year 1
Total assets (at end of fiscal year)
$2,082,437
$1,980,855
$1,743,145
Total stockholders' equity (at end of fiscal year)
1,185,620
1,162,142
862,858
Assume the apparel industry average return on total assets is
5.0% and the average return on stockholders'...

The Home Depot, Inc. (HD) operates over 2,200
home improvement retail stores and is a competitor of
Lowe's (LOW). The following data (in millions)
were adapted from recent financial statements of The Home
Depot.
Year 2
Year 1
Total assets
$39,946
$40,518
Total liabilities
30,624
27,996
Total stockholders’ equity
9,322
12,522
Earnings per share
$4.74
$3.78
1. Compute the debt ratio for Years 1 and 2.
Round to one decimal place.
Year 2
Year 1
Debt ratio
%
%
2....

Debt and price-earnings ratios
The Home Depot, Inc. (HD) operates over 2,200
home improvement retail stores and is a competitor of
Lowe's (LOW). The following data (in millions)
were adapted from recent financial statements of The Home
Depot.
Year 2
Year 1
Total assets
$39,946
$40,518
Total liabilities
30,624
27,996
Total stockholders’ equity
9,322
12,522
Earnings per share
$4.74
$3.78
1. Compute the debt ratio for Years 1 and 2.
Round to one decimal place.
Year 2
Year 1
Debt...

Selected financial data from the June 30 year-end statements of
Safford Company are given below:
Total assets
$
5,800,000
Long-term debt (11% interest rate)
$
670,000
Total stockholders’ equity
$
2,200,000
Interest paid on long-term debt
$
73,700
Net income
$
410,000
Total assets at the beginning of the year were $5,600,000; total
stockholders’ equity was $2,000,000. The company’s tax rate is
40%.
Required:
1. Compute the return on total assets. (Round your
percentage answer to 1 decimal place (i.e.,...

Selected financial
data from the June 30 year-end statements of Safford Company are
given below:
Total
assets
$
5,900,000
Long-term debt
(11% interest rate)
$
710,000
Total
stockholders’ equity
$
2,500,000
Interest paid on
long-term debt
$
78,100
Net income
$
390,000
Total assets at the
beginning of the year were $5,700,000; total stockholders’ equity
was $2,300,000. The company’s tax rate is 35%.
Required:
1. Compute the return
on total assets. (Round your percentage answer to 1 decimal
place (i.e.,...

Selected financial data from the June 30 year-end statements of
Safford Company are given below:
Total assets
$
5,400,000
Long-term debt (10% interest
rate)
$
720,000
Total stockholders’ equity
$
2,700,000
Interest paid on long-term
debt
$
72,000
Net income
$
440,000
Total assets at the beginning of the year were $5,200,000; total
stockholders’ equity was $2,500,000. The company’s tax rate is
30%.
Required:
1. Compute the return on total assets. (Round your
percentage answer to 1 decimal place (i.e.,...

Delta Inc. has provided the following information from its most
recent financial statements.
Total revenue
$150,000
Total expenses
96,000
Total current assets
38,400
Total current liabilities
9,600
Total stockholders' equity, previous year
88,800
Total stockholders' equity, current year
91.200
Use the above to answer the following three questions.
1) Compute Delta's net income percentage in the current
year.
Express percentages as a decimal. For example, 52.3% would
be .523.
If the answer is NOT a percentage, round to one decimal....

The following data were taken from the financial statements of
Gates Inc. for the current fiscal year.
Property, plant, and equipment (net)
$2,442,000
Liabilities:
Current liabilities
$222,000
Note payable, 6%, due in 15 years
1,110,000
Total liabilities
$1,332,000
Stockholders' equity:
Preferred $4 stock, $100 par (no change during year)
$1,332,000
Common stock, $10 par (no change during year)
1,332,000
Retained earnings:
Balance, beginning of year
$1,420,000
Net income
549,000
$1,969,000
Preferred dividends
$53,280
Common dividends
139,720
193,000
Balance, end of...

Accounts Receivable Analysis
Bassett Stores Company and Fox Stores Inc. are large retail
department stores. Both companies offer credit to their customers
through their own credit card operations. Information from the
financial statements for both companies for two recent years is as
follows (all numbers are in millions):
Bassett
Fox
Merchandise sales
$255,500
$357,700
Credit card receivables—beginning
47,459
81,837
Credit card receivables—ending
39,621
63,007
a. (1) Determine the accounts receivable
turnover for both companies. Round to one decimal place.
Bassett...

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