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Profitability ratios Ralph Lauren Corporation sells apparel through company-owned retail stores. Recent financial information for Ralph Lauren follows (in thousands): Fiscal Year 3 Final Year 2 Net income $567,600 $479,500 Interest expense 18,300 22,200 Fiscal Year 3 Fiscal Year 2 Fiscal Year 1 Total assets (at end of fiscal year) $4,981,100 $4,648,900 $4,356,500 Total stockholders' equity {at end of fiscal year) 3,304,700 3,116,600 2,735,100 Assume the apparel industry average return on total assets is 8.0%, and the average rate earned on stockholders' equity is 10.0% for the year ended April 2, Year 3. A. Determine the return on total assets for Ralph Lauren for fiscal Years 2 and 3. (Round percentages to one decimal place.) B. Determine the return on stockholders’ equity for Ralph Lauren for fiscal Years 2 and 3. (Round percentages to one decimal place.) C. Evaluate the two-year trend for the profitability ratios determined in (A) and (B). D. Evaluate Ralph Lauren s profit performance relative to the industry.

BuyFind

Financial & Managerial Accounting

13th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781285866307
BuyFind

Financial & Managerial Accounting

13th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781285866307

Solutions

Chapter
Section
Chapter 15, Problem 15.18EX
Textbook Problem

Profitability ratios

Ralph Lauren Corporation sells apparel through company-owned retail stores. Recent financial information for Ralph Lauren follows (in thousands):

  Fiscal Year 3 Final Year 2  
Net income $567,600 $479,500  
Interest expense 18,300 22,200  
  Fiscal Year 3 Fiscal Year 2 Fiscal Year 1
Total assets (at end of fiscal year) $4,981,100 $4,648,900 $4,356,500
Total stockholders' equity {at end of fiscal year) 3,304,700 3,116,600 2,735,100

Assume the apparel industry average return on total assets is 8.0%, and the average rate earned on stockholders' equity is 10.0% for the year ended April 2, Year 3.

  • A. Determine the return on total assets for Ralph Lauren for fiscal Years 2 and 3. (Round percentages to one decimal place.)
  • B. Determine the return on stockholders’ equity for Ralph Lauren for fiscal Years 2 and 3. (Round percentages to one decimal place.)
  • C. Evaluate the two-year trend for the profitability ratios determined in (A) and (B).
  • D. Evaluate Ralph Lauren s profit performance relative to the industry.

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Chapter 15 Solutions

Financial & Managerial Accounting
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Ch. 15 - Horizontal analysis The comparative temporary...Ch. 15 - Horizontal analysis The comparative accounts...Ch. 15 - Vertical analysis Income statement information for...Ch. 15 - Vertical analysis Income statement information for...Ch. 15 - Current position analysis The following items are...Ch. 15 - Current position analysis The following items are...Ch. 15 - Accounts receivable analysis A company reports the...Ch. 15 - Accounts receivable analysis A company reports the...Ch. 15 - Inventory analysis A company reports the...Ch. 15 - Inventory analysis A company reports the...Ch. 15 - Long-term solvency analysis The following...Ch. 15 - Long-term solvency analysis The following...Ch. 15 - Times interest charges are earned A company...Ch. 15 - Times interest earned A company reports the...Ch. 15 - Sales to assets A company reports the following:...Ch. 15 - Sales to assets A company reports the following:...Ch. 15 - Rate earned on total assets A company reports the...Ch. 15 - Rate earned on total assets A company reports live...Ch. 15 - Common stockholders profitability analysis A...Ch. 15 - Common stockholders' profitability analysis A...Ch. 15 - Earnings per share and price-earnings ratio A...Ch. 15 - Earnings per share and price-earnings ratio A...Ch. 15 - Vertical analysis of income statement Revenue and...Ch. 15 - Vertical analysis of income statement The...Ch. 15 - Common-sized income statement Revenue and expense...Ch. 15 - Vertical analysis of balance sheet Balance sheet...Ch. 15 - Horizontal analysis of the income statement Income...Ch. 15 - Current position analysis The following data were...Ch. 15 - Current position analysis PepsiCo, Inc., the...Ch. 15 - Current position analysis The bond indenture for...Ch. 15 - Accounts receivable analysis The following data...Ch. 15 - Accounts receivable analysis Xavier Stores Company...Ch. 15 - Inventory analysis The following data were...Ch. 15 - Inventory analysis Dell Inc. and Hewlett-Packard...Ch. 15 - Ratio of liabilities to stockholders equity and...Ch. 15 - Ratio of liabilities to stockholders' equity and...Ch. 15 - Ratio of liabilities to stockholders' equity and...Ch. 15 - Ratio of sales to assets Three major segments of...Ch. 15 - Profitability ratios The following selected data...Ch. 15 - Profitability ratios Ralph Lauren Corporation...Ch. 15 - Six measures of solvency or profitability The...Ch. 15 - Five measures of solvency or profitability The...Ch. 15 - Earnings per share, price-earnings ratio, dividend...Ch. 15 - Price-earnings ratio; dividend yield The table...Ch. 15 - Appendix Earnings per share, extraordinary item...Ch. 15 - Appendix Extraordinary item Assume that the amount...Ch. 15 - Appendix Income statement and earnings per share...Ch. 15 - Unusual items Explain whether Colston Company...Ch. 15 - Horizontal analysis of income statement For 2016,...Ch. 15 - Vertical analysis of income statement For 2016,...Ch. 15 - Effect of transactions on current position...Ch. 15 - Nineteen measures of solvency and profitability...Ch. 15 - Solvency and profitability trend analysis Addai...Ch. 15 - Horizontal analysis of income statement For 2016,...Ch. 15 - Vertical analysis of income statement For 2016....Ch. 15 - Effect of transactions on current position...Ch. 15 - Nineteen measures of solvency and profitability...Ch. 15 - Solvency and profitability trend analysis Crosby...Ch. 15 - Financial Statement Analysis The financial...Ch. 15 - Analysis of financing corporate growth Assume that...Ch. 15 - Receivables and inventory turnover Rodgers...Ch. 15 - Vertical analysis The condensed income statements...Ch. 15 - Profitability and stockholder ratios Deere Co....Ch. 15 - Comprehensive profitability and solvency analysis...

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