Macy’s, inc. (M), sells merchandise through company-owned retail stores and an Internet website. Recent financial information for Macy’s is provided below (all numbers in millions).

Assume the apparel industry’s average return on total assets is 10.3%, and the average return on stockholders’ equity is 33.3% for Year 3.

a. Determine the return on total assets for Macy’s for Years 2 and 3. Round to one decimal place.

b. Determine the return on stockholders’ equity for Macy’s for Years 2 and 3. Round to one decimal place.

c. Evaluate the changes in the profitability ratios determined in (a) and (b).

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Year 3 Year 2 Net income $1,536 $611 Interest expense 321 367 Year 3 Year 2 Year 1 Total assets $19,381 $19,851 $20,516 Total stockholders' equity 5,661 4,322 4,253