The Records of Sage Company Showed the Following *10,000 Shares Outstanding; Current Market Price, $30 **Including Income Tax;

question 21

Essay

The records of Sage Company showed the following: $$\begin{array} { | l | r | } \hline \text { Assets } & \$ 230,000 \\\hline \text { Liabilities } & 130,000 \\\hline \text { Shareholders' equity* } & 100,000 \\\hline \text { Revenues } & \$ 100,000 \\\hline \text { Expenses } ^ { * * } & ( 81,000 ) \\\hline \text { Interest expense } & ( 2,000 ) \\\hline \text { Profit } & \$ 17,000 \\\hline\end{array}$$ *10,000 shares outstanding; current market price, $30 **Including income tax; income tax rate, 30% $\begin{array}{|l|l|}\hline(1) & \text { The return on assets is } \underline{\quad\quad}\%\\\hline(2) & \text { The return on equity is } \underline{\quad\quad}\% . \\\hline(3) & \text { The financial leverage factor is } \underline{\quad\quad}\%\\\hline(4) & \text { Is the financial leverage positive or negative? } \underline{\quad\quad}\\\hline\end{array}$

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Definitions:

Utility-Maximizing Amounts

Quantities of goods and services consumers choose in order to reach the highest level of satisfaction.

Price of C

The price of "C" refers to the cost or price level of a specific good, service, or commodity denoted as "C."

Marginal Utility

Marginal utility refers to the additional satisfaction or utility that a consumer gains from consuming one more unit of a good or service.

Positive

In the context of economics, it can refer to positive statements that are objective and can be tested by looking at the facts.