Selected financial information gathered from the Matador Corporation follows:

	Year 3	Year 2	Year 1
Average assets	$1,007,000	$1,094,000	$1,184,000
Average equity	$215,000	$294,000	$364,000
Return on assets	5.9%	6.6%	7.2%
Quick ratio	0.3	0.5	0.6
Sales	$1,650,000	$1,452,000	$1,304,000
Cost of goods sold	$1,345,000	$1,176,000	$1,043,000

Using only the data presented, which of the following statements is most correct?

A. Leverage has declined.

B. Return on equity has improved.

C. Gross profit margin has improved.