The financial statements for Castile Products, Incorporated are given below:

Castile Products, Incorporated Balance Sheet December 31
Assets
Current assets:
Cash	$ 21,000
Accounts receivable, net	220,000
Merchandise inventory	320,000
Prepaid expenses	10,000
Total current assets	571,000
Property and equipment, net	890,000
Total assets	$ 1,461,000
Liabilities and Stockholders' Equity
Liabilities:
Current liabilities	$ 210,000
Bonds payable, 11%	310,000
Total liabilities	520,000
Stockholders’ equity:
Common stock, $10 per value	$ 180,000
Retained earnings	761,000
Total stockholders’ equity	941,000
Total liabilities and stockholders’ equity	$ 1,461,000

Castile Products, Incorporated Income Statement For the Year Ended December 31
Sales	$ 2,220,000
Cost of goods sold	1,180,000
Gross margin	1,040,000
Selling and administrative expenses	600,000
Net operating income	440,000
Interest expense	34,100
Net income before taxes	405,900
Income taxes (30%)	121,770
Net income	$ 284,130

Account balances at the beginning of the year were: accounts receivable, $220,000; and inventory, $320,000. All sales were on account. Assets at the beginning of the year totaled $1,030,000, and the stockholders’ equity totaled $665,000.

Required:

Compute the following: (For Requirements 1 to 4, enter your percentage answers rounded to 2 decimal places (i.e., 0.1234 should be entered as 12.34).)

1. Gross margin percentage.

2. Net profit margin percentage.

3. Return on total assets.

4. Return on equity.

5. Was financial leverage positive or negative for the year?

Answer rating: 100% (QA)

1 Gross margin percentage The gross margin percentage for Castile Products Incorporated for the year ... View the full answer