Question

The financial statements for Castile Products, Inc., are givenbelow:

Castile Products, Inc. Balance Sheet December 31
Assets
Current assets:
Cash				$	24,000
Accounts receivable, net					170,000
Merchandise inventory					310,000
Prepaid expenses					7,000
Total currentassets					511,000
Property andequipment, net					900,000
Total assets				$	1,411,000
Liabilitiesand Stockholders' Equity
Liabilities:
Current liabilities				$	280,000
Bonds payable, 11%					340,000
Totalliabilities					620,000
Stockholders’equity:
Common stock, $10 par value				$	170,000
Retained earnings					621,000
Total stockholders’equity					791,000
Total liabilitiesand stockholders' equity				$	1,411,000

Castile Products, Inc. Income Statement For the Year Ended December 31
Sales	$	2,250,000
Cost of goodssold		1,250,000
Gross margin		1,000,000
Selling andadministrative expenses		630,000
Net operatingincome		370,000
Interestexpense		37,400
Net income beforetaxes		332,600
Income taxes(30%)		99,780
Net income	$	232,820

Account balances at the beginningof the year were: accounts receivable, $220,000; and inventory,$330,000. All sales were on account. Assets at the beginning of theyear totaled $1,070,000, and the stockholders’ equity totaled$715,000.

Required:

Compute the following:

1.	Gross margin percentage. (Round your percentage answerto 2 decimal places (i.e., 0.1234 should be entered as12.34).)

2.	Net profit margin percentage. (Round your answer to thenearest whole percentage place (i.e., 0.1234 should be entered as12%).)

3.	Return on total assets. (Round your percentage answer to1 decimal place (i.e., 0.1234 should be entered as12.3).)

4.	Return on equity. (Round your percentage answer to 1decimal place (i.e., 0.1234 should be entered as12.3).)

5.

Was financial leverage positiveor negative for the year?

	Positive
	Negative