Batty Bricks Inc. has the following balance sheet and income statement: Amount Amount Cash 24,000 Accounts...

Transcribed Image Text:

Batty Bricks Inc. has the following balance sheet and income statement: Amount Amount Cash 24,000 Accounts payable 33,000 Receivables 33,000 Other current liabilities 19,000 Inventory Current assets 146,000 89,000 Current liabilities 52,000 Long-term debt 120,000 Net fixed assets 104,000 Total assets Equity 78,000 250,000 Total liabilities & equity 250,000 Sales were $260,000 and net income was $52,000 for the year. The CFO thinks that inventories are excessive and could be reduced until the current ratio equals the industry average of 1.8, without affecting sales or net income. The funds generated by selling off inventory are used to buy back common stock at book value. Part 1 What is the new level of current assets with a current ratio of 1.8? 0+ decimals Attempt 1/10 for 1.5 pts. Part 2 What should be the new level of inventory? 0+ decimals BAttempt 1/10 for Submit Part 3 How much inventory should be sold off? 0+ decimals Submit Part 4 What is the new book value of common equity after the buyback? 0+ Decimals Subunit Attempt 1/10 for Attempt 1/10 for Part 5 What is the new ROE after the stock buyback? 2+ decimals Submit Batty Bricks Inc. has the following balance sheet and income statement: Amount Amount Cash 24,000 Accounts payable 33,000 Receivables 33,000 Other current liabilities 19,000 Inventory Current assets 146,000 89,000 Current liabilities 52,000 Long-term debt 120,000 Net fixed assets 104,000 Total assets Equity 78,000 250,000 Total liabilities & equity 250,000 Sales were $260,000 and net income was $52,000 for the year. The CFO thinks that inventories are excessive and could be reduced until the current ratio equals the industry average of 1.8, without affecting sales or net income. The funds generated by selling off inventory are used to buy back common stock at book value. Part 1 What is the new level of current assets with a current ratio of 1.8? 0+ decimals Attempt 1/10 for 1.5 pts. Part 2 What should be the new level of inventory? 0+ decimals BAttempt 1/10 for Submit Part 3 How much inventory should be sold off? 0+ decimals Submit Part 4 What is the new book value of common equity after the buyback? 0+ Decimals Subunit Attempt 1/10 for Attempt 1/10 for Part 5 What is the new ROE after the stock buyback? 2+ decimals Submit