14. Pacific Packaging's ROE last year was only 3%, but its management has developed a new operating plan that calls for a debt-to-capital ratio of 60%, which will result in annual interest charges of $155,000. The firm has no plans to use preferred stock and total assets equal total invested capital. Management projects an EBIT of $360,000 on sales of $5,000,000, and it expects to have a total assets turnover ratio of 3.2. Under these conditions, the tax rate will be 25%. If the changes are made, what will be the company's return on equity? Do not round intermediate calculations. Round your answer to two decimal places.

15. Lloyd Inc. has sales of $500,000, a net income of $35,000, and the following balance sheet:

Cash	$	144,450		Accounts payable	$	141,750
Receivables		194,400		Notes payable to bank		102,600
Inventories		499,500		Total current liabilities	$	244,350
Total current assets	$	838,350		Long-term debt		189,000
Net fixed assets		511,650		Common equity		916,650
Total assets	$	1,350,000		Total liabilities and equity	$	1,350,000

The new owner thinks that inventories are excessive and can be lowered to the point where the current ratio is equal to the industry average, 2, without affecting sales or net income. If inventories are sold and not replaced (thus reducing the current ratio to 2), if the funds generated are used to reduce common equity (stock can be repurchased at book value), and if no other changes occur, by how much will the ROE change? Do not round intermediate calculations. Round your answer to two decimal places.

ROE will -Select-increasedecreaseItem 1 by percentage points.

What will be the firm's new quick ratio? Do not round intermediate calculations. Round your answer to two decimal places.