This question is from chapter 15 of Managerial Accounting 16^th edition by Ray Garrison.

Exercise 15-11 Financial Ratios for Assessing Profitability and Managing Debt [LO15-4, LO15-5] Selected financial data from the June 30 year-end statements of Safford Company are given below: Total assets Long-term debt (9% interest rate) Total stockholders' equity Interest paid on long-term debt Net income $5,400,000 $ 660,000 $2,800,000 $ 59,400 $ 400,000 Total assets at the beginning of the year were $5,200,000; total stockholders' equity was $2,600,000. The company's 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? Return on total assets 13.7 % 2.Return on equity 14.80% Financial Leverage Positive