Business, 11.06.2020 16:57, itskarmaboo

Lloyd Inc. has sales of $250,000, a net income of $20,000, and the following balance sheet: Cash $51,000 Accounts payable $63,600 Receivables 118,800 Notes payable to bank 40,800 Inventories 294,000 Total current liabilities $104,400 Total current assets $463,800 Long-term debt 82,800 Net fixed assets 136,200 Common equity 412,800 Total assets $600,000 Total liabilities and equity $600,000 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, 2.5x, without affecting sales or net income. If inventories are sold and not replaced (thus reducing the current ratio to 2.5x); 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.

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Lloyd Inc. has sales of $250,000, a net income of $20,000, and the following balance sheet: Cash $51...