Profitability ratios

Ann Taylor Retail, Inc., sells professional women’s apparel through company-owned retail stores. Recent financial information for Ann Taylor is provided below (all numbers in thousands).

	Fiscal Year Ended
	February 2, 2008	February 3, 2007
Net income	$97,235	$142,982
Interest expense	2,172	2,230
	February 2, 2008	February 3, 2007	January 28, 2006
Total assets	$1,393,755	$1,568,503	$1,492,906
Total stockholders’ equity	839,484	1,049,911	1,034,482

Assume the apparel industry average rate earned on total assets is 5.0%, and the average rate earned on stockholders’ equity is 8.0% for the year ended February 2, 2008 (fiscal year 2007).

a. Determine the rate earned on total assets for Ann Taylor for the fiscal years ended February 2, 2008, and February 3, 2007. Round to one digit after the decimal place.

b. Determine the rate earned on stockholders’ equity for Ann Taylor for the fiscal years ended February 2, 2008, and February 3, 2007. Round to one decimal place.

c. Evaluate the two-year trend for the profitability ratios determined in (a) and (b).

d. Evaluate Ann Taylor’s profit performance relative to the industry.

10 years ago

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Profitability ratios

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