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

Castile Products, Inc. Balance Sheet December 31 Assets Current assets: Cash $ 19,000 Accounts receivable, net 220,000 Merchandise inventory 330,000 Prepaid expenses 8,000 Total current assets 577,000 Property and equipment, net 850,000 Total assets $ 1,427,000 Liabilities and Stockholders' Equity Liabilities: Current liabilities $ 270,000 Bonds payable, 12% 390,000 Total liabilities 660,000 Stockholders equity: Common stock, $5 par value $ 140,000 Retained earnings 627,000 Total stockholders equity 767,000 Total liabilities and stockholders' equity $ 1,427,000

Castile Products, Inc. Income Statement For the Year Ended December 31 Sales $ 2,250,000 Cost of goods sold 1,170,000 Gross margin 1,080,000 Selling and administrative expenses 570,000 Net operating income 510,000 Interest expense 46,800 Net income before taxes 463,200 Income taxes (30%) 138,960 Net income $ 324,240

Account balances at the beginning of the year were: accounts receivable, $190,000; and inventory, $310,000. All sales were on account. Assets at the beginning of the year totaled $1,050,000, and the stockholders equity totaled $645,000.

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?

Positive Negative