he financial statements for Castile Products, Inc., are given below:

Castile Products, Inc.

Balance Sheet

December 31AssetsCurrent assets:Cash$6,500Accounts receivable, net35,000Merchandise inventory70,000Prepaid expenses3,500Total current assets115,000Property and equipment, net185,000Total assets$300,000Liabilities and Stockholders' EquityLiabilities:Current liabilities$50,000Bonds payable, 10%80,000Total liabilities130,000Stockholders' equity:Common stock, $5 per value30,000Retained earnings140,000Total stockholders' equity170,000Total liabilities and stockholders' equity$300,000

Castile Products, Inc.

Income Statement

For the Year Ended December 31Sales$420,000Cost of goods sold292,500Gross margin127,500Selling and administrative expenses89,500Net operating income38,000Interest expense8,000Net income before taxes30,000Income taxes (30%)9,000Net income$21,000

Account balances at the beginning of the year were: accounts receivable, $25,000; and inventory, $60,000. All sales were on account. Assets at the beginning of the year totaled $280,000, and the stockholders' equity totaled $161,600.

Required:

Compute the following:

1. Gross margin percentage.(Round your percentage answer to 2 decimal places (i.e., 0.1234 should be entered as 12.34).)

2. Net profit margin percentage.(Round your answer to the nearest whole percentage place (i.e., 0.1234 should be entered as 12).)

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

4. Return on equity.(Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)

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