East Point Retail, Inc., sells professional women's apparel through company-owned retail stores. Recent financial information for East
Question:
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 |
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.
Financial Accounting
ISBN: 978-0078025549
3rd edition
Authors: J. David Spiceland, Wayne Thomas, Don Herrmann