Lloyd Inc. has sales of $550,000, a net income of $55,000, and the following balance sheet: $ 105,655 Accounts payable 118,745 Notes payable to bank 561,000 Total current liabilities Cash Receivables Inventories $ 97,240 41,140 $ 138,380 163,625 $785,400 Long-term debt Total current assets Net fixed assets 149,600 Common equity 632,995 Total assets $935,000 Total liabilities and equity $935,000 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 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. Check My Work (1 remaining)

Loyd Inc. has saies of $550,000, a net income of $55,000, and the following balence sheet: 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, 2.5 without affecting sales or net income. If inventories are sold and not replaced (thus reducing the current ratio to 2.5 ), 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 by percentage points. What will be the firm's new quick ratio? Do not round intermediate caiculations. Round your answer to two decimal places