Ann Taylor Retail, Inc., sells professional women’sapparel through company-owned

Question

Ann Taylor Retail, Inc., sells professional women’sapparel through company-owned retail stores. Recent financialinformation for Ann Taylor is provided below (all number inthousands):

                                               Year2                        Year 1

NetIncome                            81,872                        63,276

InterestExpense                    2,083                          3,641

End ofyear                            Year2                        Year1                        Year 0

Totalassets                             1,492,906                   1,327,338                   1,256,397

Total stockholders’ equity     1,034,482                   926,744                      818,856

Assume the apparel industry average rate earned on total assetsis 8.2%, and the average rate earned on stockholders’ equityis 16.7% for Year 1.

(Note: (a) Year 2 rate earned on total assets,6.0%)

Explanation / Answer

Year2

Year1

Year2

Year1

Net Income 81,872.00 63,276.00 Interest Expense 2,083.00 3,641.00 Earnings Before interest 83,955.00 66,917.00 Total Assets 1,492,906.00 1,327,338.00 Stock holders's Equity 1,034,482.00 926,744.00 Return on total assets 5.62% 5.04% Return on Stock holders'Equity 7.91% 6.83% The given company is showing a positive trend & moving closer to the industry averages .

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