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Balance Sheet cash 14,000 receivables 70,000 inventories 280,000 total cur. assets 364,000 net fix assets 126000 TOTAL ASSETS 490000 sales 280000 Net income 21000 Income

Balance Sheet cash 14,000 receivables 70,000 inventories 280,000 total cur. assets 364,000 net fix assets 126000 TOTAL ASSETS 490000 sales 280000 Net income 21000 Income statement: account payable 42,000 other cur. liab. 28,000 total cur liab 70,000 long term debt 140,000 Current Equity 280,000 total L&E 490,000 The new CFO thinks that inventories are excessive and could be lowered sufficiently to cause the current ratio to equal the industry average, 2.75, without affecting either sales or net income. Assuming that inventories are sold off and not replaced to get the current ratio to the target level, and that the funds generated are used to buy back common stock at book value, by how much would the ROE change

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