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

Total assets	$	5,500,000
Long-term debt (10% interest rate)		$650,000
Total stockholders equity	$	2,900,000
Interest paid on long-term debt		$65,000
Net income		$400,000

Total assets at the beginning of the year were $5,300,000; total stockholders equity was $2,700,000. The companys tax rate is 40%.

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).)

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

Total assets	$	5,500,000
Long-term debt (10% interest rate)		$650,000
Total stockholders equity	$	2,900,000
Interest paid on long-term debt		$65,000
Net income		$400,000

Total assets at the beginning of the year were $5,300,000; total stockholders equity was $2,700,000. The companys tax rate is 40%.

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).)

Return on total assets

%

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

Return on equity

%

3.

Is financial leverage positive or negative?

	Positive
	Negative