December 31AssetsCurrent assets:Cash$19,000Accounts receivable, net220,000Merchandise inventory370,000Prepaid expenses7,000Total current assets616,000Property and equipment, net860,000Total assets$1,476,000Liabilities and Stockholders' EquityLiabilities:Current liabilities$210,000Bonds payable, 11%310,000Total liabilities520,000Stockholders' equity:Common stock, $5 par value$200,000Retained earnings756,000Total stockholders' equity956,000Total liabilities and stockholders' equity$1,476,000

Castile Products, Inc.

Income Statement

For the Year Ended December 31Sales$2,170,000Cost of goods sold1,230,000Gross margin940,000Selling and administrative expenses640,000Net operating income300,000Interest expense34,100Net income before taxes265,900Income taxes (30%)79,770Net income$186,130

Account balances at the beginning of the year were: accounts receivable, $160,000; and inventory, $300,000. All sales were on account. Assets at the beginning of the year totaled $1,040,000, and the stockholders' equity totaled $705,000.

Required:

Compute the following:(For Requirements 1 to 4, enter your percentage answers rounded to 2 decimal places (i.e., 0.1234 should be entered as 12.34).)

1. Gross margin percentage.

2. Net profit margin percentage.

3. Return on total assets.

4. Return on equity.

5. Was financial leverage positive or negative for the year?