1)

Newton Inc Statement of Income 12/31/2010 1 2/31/2009 Revenues $18,000,000 $17,650,000 Rental Income - - Total Revenues 18,000,000 17,650,000 Cost of Revenues 10,983,333 10,502,000 Gross Profit 7,016,667 7,148,000 Selling, General and Administrative Expenses 3,000,000 3,000,000 Income from Operations 4,016,667 4,148,000 Other Income (Expense): Interest Expense (16,000) (17,000) Interest Income 36,000 36,000 Gain (Loss) from Foreign Currency Exchange - - Total Other Income (Expense) 20,000 19,000 Total Income (loss) before Provision for Income Taxes 4,036,667 4,167,000 Provision for Income Taxes (1,009,167) (1,041,750) Net Income $ 3,027,500 $ 3,125,250

1)	Calcluate the following profitablility ratios:
				2010		2009		Formulas
a)	Percent return on net sales
b)	Percent return on assets employed

What does the percent return on net sales indicate? What does the percent return on assets employed indicate? What does the change from 2009 to 2010 in the percent return on assets mean for the company?

Newton Inc Balance Sheet 12/31/2010 12/31/2010 12/31/2009 Assets Current Assets: Cash and Equivalents $ 1,389,781 $ 500,000 Accounts Receivable, Net 350,000 350,000 Inventory 475,000 400,000 Prepaid Expenses and Other Current Assets 27,500 27,500 Total Current Assets 2,242,281 1,277,500 Property and Equipment, Net 1,279,000 1,179,000 Other Assets 100,000 100,000 - - Total Assets $ 3,621,281 $ 2,556,500 Liabilities and Stockholders' Equity Current Liabilities: Current Maturities of Long-Term Debt $ 686,211 $ 485,000 Accrued Other 26,842 27,842 Accounts Payable 350,000 250,000 Accrued Expenses 27,500 27,500 Total Current Liabilities 1,090,553 790,342 Long-Term Debt, Net of Current Maturities 475,000 Accrued Other Long Term 45,000 45,000 - - Total Liabilities 1,135,554 1,310,343 - - Shareholders' Equity: Common Stock ( .50 par) 885,000 885,000 Retained Earnings 1,744,728 505,158 - - 2,629,727 1,390,157 Less: Treasury Stock 144,000 144,000 Total Stockholders' Equity 2,485,727 1,246,157 Total Liabilities and Stockholders' Equity $ 3,621,281 $ 2,556,500 - Statement of Retained Earnings for the Year Ended 2009 Beginning Retained Earnings, January 1 (2,000,000) Plus Net Income 3,125,250 1,125,250 Less Dividends (620,092) Ending Retained Earnings 12/31/09 505,158 - Statement of Retained Earnings for the Year Ended 2010 Beginning Retained Earnings, January 1 505,158 Plus Net Income 3,027,500 3,532,658 Less Dividends (1,787,930) Ending Retained Earnings 12/31/10 1,744,728