еBookProblem Walk-ThroughLloyd Inc. has sales of $700,000, a net income of $70,000, and the following balance sheet:Cash$147,630Accounts payable$118,370Receivables231,420Notes payable to bank95,760Inventories678,300Total current liabilities$214,130Total current assets$1,057,350Long-term debt232,750Net fixed assets272,650Common equity883,120Total assets$1,330,000Total liabilities and equity$1,330,000The new owner thinks that inventories are excessive and can be lowered to the point where the current ratio is equal to the industry average, 2x, withoutaffecting sales or net income. If inventories are sold and not replaced (thus reducing the current ratio to 2x); if the funds generated are used to reduce commonequity (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.%What will be the firm's new quick ratio? Do not round intermediate calculations. Round your answer to two decimal places.

In this question we are require to calculate the ROE and quick ratio. Lets start with basic…

Answered: Lloyd Inc. has sales of $700,000, a net…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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