The new CFO thinks that inventories are excessive and could be lowered sufficiently to cause the current ratio to equal the industry average, 2.00, without affecting either sales or net income. Assuming that inventories are sold off and not replaced to get the current ratio to the target level, and that the funds generated are used to buy back common stock at book value, by how much would the ROE change?

Select the correct answer.

a. 9.69%

b. 9.17%

c. 10.73%

d. 10.21%

e. 11.25%

Muscarella Inc. has the following balance sheet and income statement data:

Cash	$ 14,000	Accounts payable	$ 42,000
Receivables	70,000	Other current liabilities	28,000
Inventories	210,000	Total CL	$ 70,000
Total CA	$294,000	Long-term debt	70,000
Net fixed assets	126,000	Common equity	280,000
Total assets	$420,000	Total liab. and equity	$420,000
Sales	$280,000
Net income	$ 21,000