5. You are consideringinvesting in Walters Wares, Inc. You have been able to locate thefollowing information on the firm: total assets = $24 million,accounts receivable = $6 million, ACP = 20 days, net income = $2.86million, and debt-to-equity ratio = 2.5 times. What is the ROE forthe 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 of14.8% 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 atotal 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 thefollowing statements is (are) correct?
(x) The maximum growth rate that can be achieved financing assetgrowth with new debt and retained
earnings is called the sustainable growth rate
(y) The maximum growth rate that can be achieved by financing assetgrowth with internal financing or
retained earnings is called the internal growth rate
(z) The internal growth rate is the growth rate that the firm cansustain if it finances growth using only internal
financing. The sustainable growth rate is the growth rate the firmcan 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