Problem 4-14 Return on Equity and Quick Ratio Lloyd Inc. has sales of $350,000, a net income of $24,500, and the following balance sheet: $51,240 Accounts payable Cash $94,080 Receivables 159,600 Other current liabilities 46,200 Inventories 352,800 Long-term debt 148.680 276.360 Common equity Net fixed 551.040 assets Total assets $840,000 Total liabilities and $840,000 equity 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. 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 ROE change? Round your answer to two decimal places a b. What will be the firm's new quick ratio? Round your answer to two decimal places