Help Me please!

5. Thomas Corp. has the following simplified balance sheet:

Cash $ 50,000 Current liabilities $125,000

Inventory 150,000

Accounts receivable 100,000 Long-term debt 175,000

Net fixed assets 200,000 Common equity 200,000

Total $500,000 Total $500,000

Sales for the year totaled $600,000. The company president believes the company carries excess inventory. She would like the inventory turnover ratio to be 8.0 and would use the freed up cash to reduce current liabilities. If the company follows the president's recommendation and sales remain the same, the new quick ratio would be:

a. 2.4

b. 4.0

c. 4.5

d. 1.2

e. 3.0

ANSWER: ?

Show your calculations: ?

6. Daggy Corporation has the following simplified balance sheet:

Cash $ 25,000 Current liabilities $200,000

Inventory 190,000

Accounts receivable 125,000 Long-term debt 300,000

Net fixed assets 360,000 Common equity 200,000

Total $700,000 Total $700,000

The company has been advised that their credit policy is too generous and that they should reduce their days sales outstanding to 36.5 days (assume a 365-day year). The increase in cash resulting from the decrease in accounts receivable will be used to reduce the companys long-term debt. The interest rate on long-term debt is 10 percent and the companys tax rate is 30 percent. The tighter credit policy is expected to reduce the companys sales to $750,000 and result in EBIT of $70,000. What is the companys expected ROE after the change in credit policy?

a. 14.88%

b. 16.63%

c. 15.75%

d. 18.38%

e. 16.25% ANSWER: ?

Show your calculations : ?