i INCREASE OR DECREASE FOR DROP DOWN

Lloyd Inc. has sales of $450,000, a net income of $45,000, and the following balance sheet: Cash $ 74,385 Accounts payable $ 142,245 Receivables 165,735 Notes payable bank 56,115 Inventories 639,450 Total current liabilities $ 198,360 Total current assets $ 879,570 Long-term debt 181,395 Net fixed assets 425,430 Common equity 925,245 Total assets $1,305,000 Total liabilities and equity $1,305,000 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. ROE will -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