(Answered) Problem - measures of performance and financial

Accounting

Problem - Measures of Performance and Financial Leverage

Following are selected data from year-end financial statements of Nelox Corporation for 2014 and 2013.

	2014	2013
Total Assets	7,349,000	6,553,000
Interest Expenses	115,000	102,000
Long-term liabilities	1,220,000	1,239,000
Net Income	619,000	563,000
Sales	8,196,000	6,996,000
Stockerholder's Equity	3,624,000	3,221,000

Required -

a. Compute the following performance measurement ratios for 2014. (Round computations to three decimal places and ignore income taxes.)

1. Asset turnover

2. Return on sales

3. Return on assets

4. Return on equity

b. Is Nelox Company using financial leverage? If so, is the leverage favorable or unfavorable? Explain.

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