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					230,000
Merchandise inventory					350,000
Prepaid expenses					11,000
Total current assets					610,000
Property and equipment, net					820,000
Total assets				$	1,430,000
Liabilities and Stockholders' Equity
Liabilities:
Current liabilities				$	260,000
Bonds payable, 11%					380,000
Total liabilities					640,000
Stockholders equity:
Common stock, $5 par value				$	200,000
Retained earnings					590,000
Total stockholders equity					790,000
Total liabilities and stockholders' equity				$	1,430,000

Castile Products, Inc. Income Statement For the Year Ended December 31
Sales	$	2,170,000
Cost of goods sold		1,230,000
Gross margin		940,000
Selling and administrative expenses		560,000
Net operating income		380,000
Interest expense		41,800
Net income before taxes		338,200
Income taxes (30%)		101,460
Net income	$	236,740

Account balances at the beginning of the year were: accounts receivable, $150,000; and inventory, $320,000. 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).)

Gross margin percentage

45.70

%

2.	Net profit margin percentage. (Round your answer to the nearest whole percentage place (i.e., 0.1234 should be entered as 12%).)

Net profit margin percentage

56

%

3.	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

87.9

%

4.	Return on equity. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)

Return on equity

54.1

%

5.

Was financial leverage positive or negative for the year?

	Positive
	Negative