RETURN ON EQUITY AND QUICK RATIO Lloyd Inc. has sales of $400,000, a net income of $36,000, 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, 1.75x, without affecting sales or net income a. If inventories are sold and not replaced (thus reducing the current ratio to 1.75x); if the funds generated are used to reduce common equity (stock can be $70,040 Accounts payable 100,640 Notes payable to bank 312,800 Ttal current liabilities $80,920 42,840 $123,760 121,720 434,520 $680,000 $483,480 Long-term debt 196,520 Common equity $680,000 Total liabilities and equity 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 9.81 b. What will be the firm's new quick ratio? Do not round intermediate calculations. Round your answer to two decimal places 1.38