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The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December 31 Assets Current assets: Cash Accounts receivable, net Merchandise inventory Prepaid expenses S 21,000 220,000 300,000 11,000 Total current assets Property and equipment, net 552,000 900,000 Total assets $1,452,000 Liabilities and Stockholders' Equity Liabilities: Current liabilities Bonds payable, 9 % $230,000 350,000 Total liabilities Stockholders' equity: Common stock, $10 par value Retained earnings 580,000 $110,000 762,000 Total stockholders' equity 872,000 Total liabilities and stockholders' equity $1,452,000 Castile Products, Inc. Income Statement For the Year Ended December 31 Sales $2,250,000 1,250,000 Cost of goods sold Gross margin Selling and administrative expenses 1,000,000 630,000 Net operating income Interest expense 370,000 31,500 Net income before taxes Income taxes (30 %) 338,500 101,550 Net income $ 236,950 Account balances at the beginning of the year were: accounts receivable, $200,000; and inventory, $340,000. All sales were on account. Assets at the beginning of the year totaled $1,100,000, and the stockholders' equity totaled $725,000. Required: Compute the following 1. Gross margin percentage. (Round your percentage answer to 2 decimal places (Le., 0.1234 should be entered as 12.34).) Gross margin percentage % 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 % 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 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 5. Was financial leverage positive or negative for the year? Positive Negative

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