loyd inc. has sales of $200,000, a net income of $10,000. Following balance sheet:

cash	25840	accounts payable	36480
receivables	74480	notes payable to bank	14060
inventories	216600	total current liabilities	50540
total current assest	316920	long term debt	48640
net fixed assests	63080	common equity	280820
total assets	380000	total liabilities and equity	380000

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, 2.25x, without affecting sales or net income.

If inventories are sold and not replaced (thus reducing the current ratio to 2.25x);

a) 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.

b) What will be the firm's new quick ratio? Do not round intermediate calculations. Round your answer to two decimal places.

Lloyd Inc. has sales of $200,000, a net income of $10,000, and the following balance sheet: Cash Receivables Inventories Total current assets Net fixed assets 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, 2.25x, without affecting sales or net income. a. If inventories are sold and not replaced (thus reducing the current ratio to 2.25x); 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 ROB 525,840 Accounts payable $36,480 14,060 $50,540 48,640 280,820 $380,000liabilities and equity $380,000 4,480 Notes payable to bank 216,600 Total current liabilities $316,920 Long-term debt 63,080 Common equity change? Do not round intermediate calculatlons. Round your answer to two decimal places. b. What will be the firm's new quick ratio? Do not round intermediate calculations. Round your answer to two decimal places