Selected Financial Ratios for Common Stockholders [LO2]

Refer to the financial statements for Madison Company in Exercise 15–6 . Assets at the beginning of the year totaled $1,100,000, and the stockholders’ equity totaled $725,000.

Required:

Compute the following:

1. Return on t otal a ssets.

2. Return on c ommon s tockholders’ e quity.

3. Was financial leverage positive or negative for the year? Explain.