Represent an unfavorable development

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Reference no: EM131990021

Each of the following would generally be thought of as a favorable indicator of the firm's financial position:

a. A current ratio well above 2.0, which is substantially higher than that for other firms in the industry.

b. Collection period significantly lower than for several recent periods.

c. Rapidly rising merchandise inventory turnover.

Required:

In each case, give an example of circumstances underlying the ratio that might represent an unfavorable development.

Reference no: EM131990021

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