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

Total assets $ 5,400,000

Long-term debt (10% interest rate) $ 710,000

Total stockholders equity $ 3,000,000

Interest paid on long-term debt $ 71,000

Net income $ 390,000

Total assets at the beginning of the year were $5,200,000; total stockholders equity was $2,800,000. 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).)

3. Is financial leverage positive or negative?