Lloyd Inc. has sales of $150,000, a net income of $13,500, andthe following balance sheet:...

Lloyd Inc. has sales of $150,000, a net income of $13,500, and the following balance sheet: Cash $36,660 Accounts payable $34,320 Receivables 75,270 Notes payable to bank 16,380 Inventories 218,400 Total current liabilities $50,700 Total current assets $330,330 Long-term debt 50,700 Net fixed assets 59,670 Common equity 288,600 Total assets $390,000 Total liabilities and equity $390,000 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, 2.25x, without affecting sales or net income. If 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? 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.

Expert Solution

jeff jeffy answered 2 years ago

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