Task: Consider each of the following situations independently of each other.
1. Current ratio increases from one period to the next.
2. Accounts receivable turnover increases from one period to the next.
3. Accounts payable turnover increases from one period to the next.
Question 1: Provide one example of when the underlying circumstances may be such that the observed trend is unfavorable.
Question 2: Provide one example of when the underlying circumstances may be such that the observed trend is favorable.