5. A fire has destroyed a large percentage of the financial records of the Carter Company. You have the task of piecing together information in order to release a financial report. You have found the return on equity to be 25%. If sales were $61,000,000, the debt ratio was 40%, and total liabilities were $12,000,000, what would be the return on assets (ROA)?

a. 8.33% b. 10.00% c. 16.56% d. 19.94% e. 15.00%

6. The RRR Company has a target current ratio of 3.2. Presently, the current ratio is 4.4 based on current assets of $6,556,000. If RRR expands its inventory using short-term liabilities (maturities less than one year), how much additional funding can it obtain before its target current ratio is reached?

a. $855,802 b. $558,750 c. $666,182 d. $812,727 e. $913,749

Use the following information to answer questions 7 and 8.

Balance Sheets Cash Acc receivable 960,000 Inventories 1,440,000 Fixed assets 4,800,000 TOTAL ASSETS 8,000,000 Current liabilities Acc payable Long-term debt 3,200,000 Common stock 640,000 Retained earnings 3,160,000 TOTAL LIAB and EQUITY 8,000,000 Income Statement Sales 24,000,000 Operating expense 18,240,000 EBIT 5,760,000 Interest expense 416,000 EBT 5,344,000 Taxes 2,138,000 Net income 3,206,000

7. What is the firms debt ratio?

a. 87.50% b. 40.00% c. 47.50% d. 52.50% e. 92.00%

8. What is the firms return on equity?

a. 40.08% b. 500.94% c. 101.46% d. 84.37% e. 45.80%