ignment Saved Problem 2-4 (Algo) As the operations manager for Valley Kayaks (as described in the previous problem), you find yourself faced with an interesting situation. Marketing has informed you that they have lost a number of sales because of a lack of inventory. Kayaks, being seasonal in nature, have to be in stock at your dealers if they are to be sold (customers are not willing to wait). The director of marketing proposes that you increase inventories by 15 percent (a major investment to you). She has also given the information in the following table. Use Figure 23 Category Sales Cost of goods sold Variable expenses Fixed expenses Inventory Accounts receivable Other current assets Fixed assets Current Values $ 2,870,000 $ 2.050,000 $ 410,000 s 143,500 $ 540,000 $ 390,000 $ 774,000 $ 519,000 Proposed Impact of Inventory Increase 25% + (improvement) 0% 15% - reduction 20% + (increase) 15% + 096 09 09 a.Using the information given, complete the following table and calculate the ROA for current values and new values. (Round "ROA" to 2 decimal places.) Current Values New Values $ Category Sales Cost of goods sold Variable expenses Fixed expenses Inventory Accounts receivable $ $ $ 2,870,000 2,050,000 410,000 143,500 540,000 390,000 77. A $ $ Fixed assets 519,000 0% a.Using the information given, complete the following table and calculate the ROA for current values and new values. 2 decimal places.) Current Values New Values $ $ $ Category Sales Cost of goods sold Variable expenses Fixed expenses Inventory Accounts receivable Other current assets Fixed assets ROA s $ 2,870,000 2,050,000 410,000 143,500 540,000 390,000 774,000 519,000 % $ $ $ % b. Would the projected change in ROA Justify the inventory investment? O Yes O NO