Rotorua Products, Ltd., of New Zealand markets agricultural products for the burgeoning Asian consumer market. The companys current assets, current liabilities, and sales over the last five years (Year 5 is the most recent year) are as follows:

	Year 1			Year 2			Year 3			Year 4			Year 5
Sales	$	1,800,000		$	1,980,000		$	2,070,000		$	2,160,000		$	2,250,000
Cash	$	50,000		$	65,000		$	48,000		$	40,000		$	30,000
Accounts receivable, net		300,000			345,000			405,000			510,000			570,000
Inventory		600,000			660,000			690,000			720,000			750,000
Total current assets	$	950,000		$	1,070,000		$	1,143,000		$	1,270,000		$	1,350,000
Current liabilities	$	400,000		$	440,000		$	520,000		$	580,000		$	640,000

Required:

1. Express all of the asset, liability, and sales data in trend percentages. Use Year 1 as the base year. (Round your percentage answers to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)

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

Total assets	$	3,600,000
Long-term debt (12% interest rate)	$	500,000
Total stockholders equity	$	2,400,000
Interest paid on long-term debt	$	60,000
Net income	$	280,000

Total assets at the beginning of the year were $3,000,000; total stockholders equity was $2,200,000. 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?

	Year 1		Year 2		Year 3		Year 4		Year 5
Sales	100.0	%	110.0	%	115.0	%	120.0	%	125.0	%
Current assets:
Cash	100.0	%	130.0	%	96.0	%	80.0	%	60.0	%
Accounts receivable	100.0	%	115.0	%	135.0	%	170.0	%	190.0	%
Inventory	100.0	%	110.0	%	115.0	%	120.0	%	125.0	%
Total current assets	100.0	%		%		%		%		%
Current liabilities	100.0	%	110.0	%	130.0	%	145.0	%		%