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5. A company with a high debt ratio probably also has a low figure for times interest earned. Why? 6. A company with a high inventory turnover is able to operate on a low per- item profit margin. A company with a low inventory turnover cannot survive on a low margin. Explain why this is so. 7. The assets of a company are based on their cost prices and therefore many of the assets are undervalued, so is the equity because the two are mathematically related. How does this affect the debt/ equity ratio? The rate of return on owner's equity? 9. Maxwell Company's payroll is due to be paid this afternoon. The payroll amounts to $22, 565, but Maxwell Company has only $14, 275 in its general bank account. Should Maxwell Company be concerned about this and if so, to what degree? Explain. What steps should Maxwell Company be taking in regard to this situation