SCENARIO 4-5Below are the 2004 and 2005 year-end balance sheets for Kewell Boomerangs:

	2005	2004
Cash	$ 100,000	$ 85,000
Accounts receivable	432,000	350,000
Inventories	1,000,000	700,000
Total current assets	$1,532,000	$1,135,000
Net fixed assets	3,000,000	2,800,000
Total assets	$4,532,000	$3,935,000
Accounts payable	$ 700,000	$ 545,000
Notes payable	800,000	900,000
Total current liabilities	$1,500,000	$1,445,000
Long-term debt	1,200,000	1,200,000
Common stock	1,500,000	1,000,000
Retained earnings	332,000	290,000
Total common equity	$1,832,000	$1,290,000
Total liabilities and equity	$4,532,000	$3,935,000

Kewell Boomerangs has never paid a dividend on its common stock. Kewell issued $1,200,000 of long-term debt in 1997. This debt was non-callable and is scheduled to mature in 2027. As of the end of 2005, none of the principal on this debt has been repaid. Assume that 2004 and 2005 sales were the same in both years.

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