EXERCISE 15-9 Financlal Ratios for Assessing Profitablity and Managing Debt LO15-4, LO15-5 Refer to the financial statements for Castile Products, Inc., in Exercise 15-8. Assets at the begin- ning of the year totaled $280,000, and the stockholders' equity totaled $161,600. Required: Compute the following: 1. Gross margin percentage. Net profit margin percentage. 3. 2. Return on total assets. Return on equity. Was financial leverage positive or negative for the year? Explain. 4. 5.

Gross margin percentage = 30%

Net profit margin percentage = 5%

Return on total assets = 13%

Return on equity = 13%

Financial leverage = 0.76

Financial leverage positive for the year and explanation is given below

Explanation:

Gross margin percentage = Gross margin ÷ Sales

= $127,500 ÷ $420,000

= 30%

Net profit margin percentage = Net income ÷ Sales

= $21,000 ÷ $420,000

= 5%

Return on total assets = Earning before interest and taxes ÷ Total sales

= $38,000 ÷ $300,000

= 13%

Return on equity = Net income ÷ Average Stockholder equity

= $21,000 ÷ ($161,600 + $170,000 ÷ 2)

= $21,000 ÷ $165,800

= 13%

Financial leverage = Total debt ÷ Shareholder equity

= $130,000 ÷ $170,000

= 0.76

Therefore, Financial leverage positive for the year and higher is lesser than a lower ratio. So, we have liabilities which is lesser than assets and company is having good financial leverage.

someone i feel is a leader in my life id have to say would be my mother because she has give me great advice in life and got me out of tough situations. some characteristics she has are creativity, honesty, commitment, respect for others, and communication. one example of a situation when she demonstrated leadership was when i was working late on homework and i started to get stressed and got upset, she asked me if i needed some , and she me with my work. she demonstrated communication and commitment.

i don't know if this is exactly what your looking for but i hope this !