8. Problem 4.15 (Return on Equity and Quick Ratio) 20 eBook Problem Walk-Through Lloyd Inc. has sales of $400,000, a net income of $32,000, and the following balance sheet: Cash $ 33,000 Accounts payable $ 53,400 Receivables 75,600 Notes payable to bank 35,400 Inventories 306,000 Total current liabilities $ 88,800 Total current assets $414,600 Long-term debt 90,600 Net fixed assets 185,400 Common equity 420,600 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, 2.25x, 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. percentage points. ROE wil -Select- Increase What w decrease s new quick ratio? Do not round intermediate calculations. Round your answer to two decimal places. 8. Problem 4.15 (Return on Equity and Quick Ratio) eBook Problem Walk-Through Lloyd Inc. has sales of $400,000, a net income of $32,000, and the following balance sheet: Cash $ 33,000 Accounts payable $ 53,400 Receivables 75,600 Notes payable to bank 35,400 Inventories 306,000 Total current liabilities $ 88,800 Total current assets $414,600 Long-term debt 90,600 Net fixed assets 185,400 Common equity 420,600 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, 2.25x, 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. ROE wilt -Select- by percentage points. What will be the firm's new quick ratio? Do not round intermediate calculations. Round your answer to two decimal places. X