Question

Profitability Metrics East Point, Inc., sells merchandise through company-owned retail stores and Internet Web sites. Recent...

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 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 %

Homework Answers

Answer #1

A]  While calculating return on total assets [ ROA ]we should consider EBIT that is earnings Before Interest and Taxes. Net income is the income after deducting Interest expenses. Therefore for our calculation we should add back interest expenses

B ] Return on stockholders equity is calculation of such returns or net income in which preference dividend is also deducted. This net income is completely belongs to Stockholders. Since in the question there is no details regarding preference dividend we can consider net income for our calculations.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
East Point, Inc., sells merchandise through company-owned retail stores and an Internet Website. Recent financial information...
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....
East Point Retail, Inc. sells apparel through company-owned retail stores. Recent financial information for East Point...
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...
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...
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...
Seven metrics The following data were taken from the financial statements of Woodwork Enterprises Inc. for...
Seven metrics The following data were taken from the financial statements of Woodwork Enterprises Inc. for the current fiscal year. Assuming that there are no intangible assets. Property, plant, and equipment (net) $ 5,000,000 Liabilities: Current liabilities $ 400,000 Mortgage note payable, 5%, ten-year note issued two years ago 3,600,000 Total liabilities $4,000,000 Stockholders' equity: Preferred $1 stock, $10 par (no change during year) $1,000,000 Common stock, $5 par (no change during year) 2,000,000 Retained earnings: Balance, beginning of year...
I need answers and explanations ASAP please and thanks. Six Measures of Solvency or Profitability The...
I need answers and explanations ASAP please and thanks. Six Measures of Solvency or Profitability The following data were taken from the financial statements of Gates Inc. for the current fiscal year. Property, plant, and equipment (net) $2,182,400 Liabilities: Current liabilities $199,000 Note payable, 6%, due in 15 years 992,000 Total liabilities $1,191,000 Stockholders' equity: Preferred $2 stock, $100 par (no change during year) $1,191,000 Common stock, $10 par (no change during year) 1,191,000 Retained earnings: Balance, beginning of year...
Twenty metrics of liquidity, Solvency, and Profitability The comparative financial statements of Automotive Solutions Inc. are...
Twenty metrics of liquidity, Solvency, and Profitability The comparative financial statements of Automotive Solutions Inc. are as follows. The market price of Automotive Solutions Inc. common stock was $56 on December 31, 20Y8. AUTOMOTIVE SOLUTIONS INC. Comparative Income Statement For the Years Ended December 31, 20Y8 and 20Y7     20Y8     20Y7 Sales $4,234,000 $3,901,040 Cost of goods sold (1,511,100) (1,390,210) Gross profit $2,722,900 $2,510,830 Selling expenses $(975,730) $(1,167,160) Administrative expenses (831,180) (685,480) Total operating expenses (1,806,910) (1,852,640) Operating income $915,990 $658,190...
Six Measures of Solvency or Profitability The following data were taken from the financial statements of...
Six Measures of Solvency or Profitability The following data were taken from the financial statements of Gates Inc. for the current fiscal year. Property, plant, and equipment (net) $1,285,700 Liabilities: Current liabilities $199,000 Note payable, 6%, due in 15 years 989,000 Total liabilities $1,188,000 Stockholders' equity: Preferred $2 stock, $100 par (no change during year) $1,782,000 Common stock, $10 par (no change during year) 1,782,000 Retained earnings: Balance, beginning of year $1,900,000 Net income 623,000 $2,523,000 Preferred dividends $35,640 Common...
Six Measures of Solvency or Profitability The following data were taken from the financial statements of...
Six Measures of Solvency or Profitability The following data were taken from the financial statements of Gates Inc. for the current fiscal year. Property, plant, and equipment (net) $895,700 Liabilities: Current liabilities $139,000 Note payable, 6%, due in 15 years 689,000 Total liabilities $828,000 Stockholders' equity: Preferred $2 stock, $100 par (no change during year) $1,242,000 Common stock, $10 par (no change during year) 1,242,000 Retained earnings: Balance, beginning of year $1,324,000 Net income 442,000 $1,766,000 Preferred dividends $24,840 Common...
PLEASE ANSWER THE WHOLE QUESTION Seven metrics The following data were taken from the financial statements...
PLEASE ANSWER THE WHOLE QUESTION Seven metrics The following data were taken from the financial statements of Woodwork Enterprises Inc. for the current fiscal year. Assuming that there are no intangible assets. Property, plant, and equipment (net) $ 5,000,000 Liabilities: Current liabilities $ 400,000 Mortgage note payable, 5%, ten-year note issued two years ago 3,600,000 Total liabilities $4,000,000 Stockholders' equity: Preferred $1 stock, $10 par (no change during year) $1,000,000 Common stock, $5 par (no change during year) 2,000,000 Retained...