Answer:
1.26
Explanation:
Current ratio=1.5
DSO=40
DSO=Net sales/Average Accounts receivable
40=(Average Accounts receivable/Net sales)*365
1,600,000/(40/365)=Net sales
Net sales=$14,600,000
Revised DSO=30
(30/365)=Average Accounts Receivable-revised/$14,600,000
Average Accounts Receivable-revised=$1,200,000
Current Assets-Old Receivables+New Receivables= $2,500,000-1,600,000+1,200,000=$2,100,000
Current liabilities=2,500,000/1.5
Current liabilities=$1,666,667
Revised current ratio=$2,100,000/1,666,667
Revised Current ratio=1.26
