eBook Problem Walk-Through Lloyd Inc. has sales of $650,000, a net income of $65,000, and the following balance sheet: Cash Receivables Inventories $191,100 Accounts payable 322,140 Notes payable to bank 837,200 Total current liabilities P $ 172,900 63,700 $ 236,600 309,400 1,274,000 $1,820,000 $1,350,440 Long-term debt Total current assets Net fixed assets 469,560 Common equity $1,820,000 Total liabilities and equity Total assets 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, 2.5x, without affecting sales or net income. If inventories are sold and not replaced (thus reducing the current ratio to 2.5x), 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- by percentage points. What will be the firm's new quick ratio? Do not round intermediate calculations. Round your answer to two decimal places.

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