A ) Using the following financial statistics, provide the complete balance sheet and sales information for St. Martin Ltd.

1	Liabilities/Equity	30%
2	Immediate liquidity	1,1
3	Asset turnover	2
4	Time to collect on accounts receivable	40 days
5	Gross margin	40%
6	Inventory turnover	5 times

Balance sheet (in$)

Cash_________	Accounts payable_________
Accounts receivable_________	Common Stocks (25 000$)
Inventories_________	Non-retirement earnings (40 000$)
Capital assets_________

Total assets _________________

Sales __________________

Liabilities and shareholders' equity _________________

Cost of goods sold _________________

Take 306 days for the year and stock rotations = Cost of goods sold / Inventory

B) Explain the concept of positive financial leverage and the consequences for a firm wishing to borrow. How can positive financial leverage be established?