Lloyd Inc. has sales of $150,000, a net income of $13,500, and the following balance sheet: Cash $19,380 Accounts payable $21,675 Receivables 46,410 Other current liabilities 14,790 Inventories 135,150 Long-term debt 43,095 Net fixed assets 54,060 Common equity 175,440 Total assets $255,000 Total liabilities and equity $255,000 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, 2.5x, without affecting either sales or net income. a. If inventories are sold off 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? Round your answer to two decimal places. b. What will be the firm's new quick ratio? Round your answer to two decimal places.