Muss Inc. As the following balance sheet and income statement data: Cash $ 14,000 70,000 210,000 $ 294,000 Net Fixed Assets 126,000 $ 420,000 Receivables Inventories Total CA Total Assets Sales Net Income a) 2.45% b) 2.50% $ 280,000 $ 21,000 c) 2.61% d) 2.69% e) 2.73% Accounts Payable ST Current Liabilities Total CL Long-Term Debt Common Equity Total Liabilities & Equity The new CFO thinks that inventories ae excessive and could be lowered sufficiently to cause the current ratio to equal the industry average, 2.50, without affecting either sales or net income. Assuming that inventories are sold off to achieve the target current ratio of 2.5, and that the funds generated are used to buy short-term investments earning a (before-tax) return of 8%, by how much would the profit margin change? Assume a tax rate of 21%. $ 42,000 28,000 $ 70,000 70,000 280,000 $ 420,000 6 $725.000 and (net)

21). Muss Inc. As the following balance sheet and income statement data: The new CFO thinks that inventories ae excessive and could be lowered sufficiently to cause the current ratio to equal the industry average, 2.50 , without affecting either sales or net income. Assuming that inventories are sold off to achieve the target current ratio of 2.5 , and that the funds generated are used to buy short-term investments earning a (before-tax) return of 8%, by how much would the profit margin change? Assume a tax rate of 21%. a) 2.45% b) 2.50% c) 2.61% d) 2.69% e) 2.73% 21). Muss Inc. As the following balance sheet and income statement data: The new CFO thinks that inventories ae excessive and could be lowered sufficiently to cause the current ratio to equal the industry average, 2.50 , without affecting either sales or net income. Assuming that inventories are sold off to achieve the target current ratio of 2.5 , and that the funds generated are used to buy short-term investments earning a (before-tax) return of 8%, by how much would the profit margin change? Assume a tax rate of 21%. a) 2.45% b) 2.50% c) 2.61% d) 2.69% e) 2.73%