Estimating current ratio


During 2005, kewell's days sales oustanding was 40 days. The industry average DSO was 30 days. Assume instead that in 2005, Jewell had been able to achieve the industry average DSO without reducing its sales, and that the free up cash would have been used to reduce accounts payable. If DSO were reduced, why would have been kewell's current ratio in 2005?

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Finance Basics: Estimating current ratio
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