4)

Selected financial data from the June 30 year-end statements of Safford Company are given below:

Total assets	$ 5,700,000
Long-term debt (12% interest rate)	$ 690,000
Total stockholders equity	$ 2,800,000
Interest paid on long-term debt	$ 82,800
Net income	$ 430,000

Total assets at the beginning of the year were $5,500,000; total stockholders equity was $2,600,000. The companys tax rate is 30%.

Required:

1. Compute the return on total assets. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)

2. Compute the return on equity. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)

3. Is financial leverage positive or negative?