RETURN ON EQUITY AND QUICK RATIO Lloyd Inc. has sales of $450,000, a net income of $31,500, and the following balance sheet: Cash $129,375 Accounts payable $104,625 Receivables 140,625 Notes payable to bank 57,375 Inventories 438,750 Total current liabilities $162,000 Total current assets $ 708,750 Long-term debt 184,500 Net fixed assets 416,250 Common equity 778,500 Total assets $1,125,000 Total liabilities and equity $1,125,000 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. 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 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