question archive Profitability ratios Ralph Lauren Corp
Profitability ratios Ralph Lauren Corp
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Profitability ratios
Ralph Lauren Corp. sells men’s apparel through company-owned retail stores. Recent financial information for Ralph Lauren follows (all numbers in thousands):
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|
Fiscal Year 3 |
Fiscal Year 2 |
|
|
Net income |
$567,600 |
$479,500 |
|
|
Interest expense |
18,300 Fiscal Year 3 |
22,200 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 rate earned 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 rate earned on total assets for Ralph Lauren for fiscal Years 2 and 3. Round to one digit after the decimal place.
b. Determine the rate earned on stockholders’ equity for Ralph Lauren for fiscal Years 2 and 3. Round 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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The following data were taken from the financial statements of Gates Inc. for the current fiscal year. Assuming that long-term investments totaled $3,000,000 throughout the year and that total assets were $7,000,000 at the beginning of the current fiscal year, determine the following: (a) ratio of fixed assets to long-term liabilities, (b) ratio of liabilities to stockholders’ equity, (c) ratio of sales to assets, (d) rate earned on total assets, (e) rate earned on stockholders’ equity, and (f) rate earned Round to one decimal place. |
on |
common stockholders’ equity. |
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Property, plant, and equipment (net) . . . . . . . . . . . . . . . . . . . . . . |
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$ 3,200,000 |
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Liabilities: |
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|
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Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
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$1,000,000 |
|
Mortgage note payable, 6%, issued 2005, due 2021 . . . . . . |
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2,000,000 |
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Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
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$ 3,000,000 |
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Stockholders’ equity: |
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|
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Preferred $10 stock, $100 par (no change during year) . . . |
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$ 1,000,000 |
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Common stock, $10 par (no change during year) . . . . . . . . Retained earnings: |
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2,000,000 |
