5- Grady Home Health has a profit margin of 15 percent on sales of $20 million. If the firm has debt of $7.5 million and total assets of $22.5 million, what is Grady's return on assets (ROA)? A) 13.3 percent B) 10.9 percent C) 8.0 percent D) 5.3 percent E) 3.1 percent

6- Which of the following statements about debt management ratios is false? A) There are two types of debt management ratios: capitalization ratios and coverage ratios. B) Capitalization ratios use balance sheet data to measure the relative amount of debt financing used. C) Coverage ratios use income statement data to measure the extent to which earnings (or cash flow) cover interest (or fixed financial) obligations. D) The debt ratio is a capitalization ratio, while the debt-to-equity ratio is a coverage ratio. E) The debt ratio is defined as total debt divided by total assets.

7- Which of the following statements is not a limitation of ratio analysis? A)There are an insufficient number of ratios available. B) Seasonal factors can distort ratios. C) Different organizations can use different, but allowed under GAAP, accounting conventions. D) It often is hard to tell whether a given ratio is "good" or "bad." E) Inflation effects can distort ratios.