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eBook Problem Walk-Through Lloyd Inc. has sales of $350,000, a net income of $35,000, and...

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eBook Problem Walk-Through Lloyd Inc. has sales of $350,000, a net income of $35,000, and the following balance sheet: Cash $50,750 Accounts payable $97,440 Receivables 194,880 Notes payable to bank 78,155 Inventories 578,550 Total current liabilities $175,595 Total current assets $824,180 Long-term debt 153,265 Net fixed assets 190,820 Common equity 686,140 Total assets $1,015,000 Total liabilities and equity $1,015,000 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, 2x, without affecting sales or net income. If inventories are sold and not replaced (thus reducing the current ratio to 2x); 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. % What will be the firm's new quick ratio? Do not round intermediate calculations. Round your answer to two decimal places. X

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