RETURN ON EQUITY AND QUICK RATIO 7: 100% Correct ales of $450,000, a net income of $36,000, and the following balance sheet: 117,450 71,775 $189,225 207,495 908,280 $1,305,000 Cash $148,770 Accounts payable 244,035 Notes payable to bank Receivables 613,350 Total current liabilities Total current assets Net fixed assets Total assets 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. a. 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 $1,006,155 Long-term debt 298,845 Common equity $1,305,000 Total liabilities and equity much will the ROE change? Do not round intermediate calculations. Round your answer to two decimal places. b. What will be the firm's new quick ratio? Do not round intermediate calculations. Round your answer to two decimal places