Example of favorable and unfavorable situation when the Current ratio increases from one interval to the subsequent?
Answers:
Current ratio is Current Assets (CA) divided by Current liability (CL). So if the ratio increases, it scheme any component of CA have increased or any component of CL have decrease or both.
Examples of a auspicious situation when the CR increases are when brass increased or ridge overdraft decrease.
Examples of bad situation when the CR increases would be if accounts receivable increased from current credit sale alone. That way the older AR have not dropped i.e. the antiquated debtors are not paying up. You could enjoy a unpromising debt situation on your hand. A similar example would be if CA increased due to inventory increases by the current inventory purchases, i.e. the mature stock are not moving. You could own a stock obsolescence problem on your hand.