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1. Loflands has $ current assets are $10 million versus $20 million of current liabilities. Both firms would like to "window S20 million in current assets and $10 million in current liabilities, while Smalands term basis and describes the results of these transactions? f-year financial statements, and to do so each plans to borrow S10 million on a shon- to then hold the borrowed funds in their cash accounts. Which of the statements below best A. The transaction would improve both firms' financial strength as measured by their current ratios . The transactions would raise Lofland's financial strength as measured by its current ratio but lower Smaland's current ratio. C. The transactions would lower Lofland's financial strength as measured by its current ratio but raise Smaland's current ratio. D. The transaction would have no effect on the firm' financial strength as measured by their current ratios. 2. Last year Swensen Corp. had sales of $303,225, operating costs of $267,500, and year-end assets of bt was 8.2%, and the firm's $195,000. The debt-to-total assets ratio was 27%, the interest rate on the de tax rate was 37%. The new CFO a 45% debt ratio. Assume tha tax the capital structure? wants to see how the ROE would have been affected if the firm had used t sales and total assets would not be affected, and that the interest rate and rate would both remain constant. By how much would the ROE change in response to the change in A. 2.32% B. 2.57% C. 2.86% D. 3.14%

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