5. You are considering investing in Walters Wares, Inc. You have been able to locate the following information on the firm: total assets = $24 million, accounts receivable = $6 million, ACP = 20 days, net income = $2.86 million, and debt-to-equity ratio = 2.5 times. What is the ROE for the firm? A. 32.5% B. 38.8% C. 41.7% D. 44.5%

E. 48.6%

6. A corporation has a total asset turnover of 1.87 times, ROA of 14.8% and ROE of 18.5%. What is this firm's profit margin?

A. 9.9% B. 9.2% C. 8.5% D. 7.9% E. 6.9%

7. A corporation has a total asset turnover of 1.87 times, ROA of 14.8% and ROE of 18.5%. What is this firm's debt ratio? [Hint: equity multiplier = 1 / (1 debt ratio)]

A. 18.5% B. 20.0% C. 21.2% D. 21.9%

E. 28.1%

8. Which of the following statements is (are) correct? (x) The maximum growth rate that can be achieved financing asset growth with new debt and retained earnings is called the sustainable growth rate (y) The maximum growth rate that can be achieved by financing asset growth with internal financing or retained earnings is called the internal growth rate (z) The internal growth rate is the growth rate that the firm can sustain if it finances growth using only internal financing. The sustainable growth rate is the growth rate the firm can sustain using both debt and internal financing such that the debt ratio remains constant. A. (x), (y) and (z) B. (x) and (y) only C. (x) and (z) only D. (y) and (z) only E. (y) only