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Lloyd Inc. has sales of $500,000, a net income of $35,000, and the following balance sheet:...

Lloyd Inc. has sales of $500,000, a net income of $35,000, and the following balance sheet:

Cash $ 144,450    Accounts payable $ 141,750
Receivables 194,400    Notes payable to bank 102,600
Inventories 499,500    Total current liabilities $ 244,350
Total current assets $ 838,350    Long-term debt 189,000
Net fixed assets 511,650    Common equity 916,650
Total assets $ 1,350,000    Total liabilities and equity $ 1,350,000

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×, without affecting sales or net income. If inventories are sold and not replaced (thus reducing the current ratio to 2×), 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-increasedecreaseItem 1 by   percentage points.

What will be the firm's new quick ratio? Do not round intermediate calculations. Round your answer to two decimal places.

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