A Firm Wants to Strengthen Its Financial Position

question 89

Multiple Choice

A firm wants to strengthen its financial position.Which of the following actions would increase its quick ratio?

• A) Issue new common stock and use the proceeds to acquire additional fixed assets.
• B) Offer price reductions along with generous credit terms that would (1) enable the firm to sell some of its excess inventory and (2) lead to an increase in accounts receivable.
• C) Issue new common stock and use the proceeds to increase inventories.
• D) Speed up the collection of receivables and use the cash generated to increase inventories.
• E) Use some of its cash to purchase additional inventories.

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Definitions:

Economic Activity

Economic activity refers to the actions that involve the production, distribution, and consumption of goods and services within an economy.

Marginal Analysis

An examination of the benefits and costs of increasing or decreasing a unit of production or consumption.

Hungry

The physical sensation of needing or wanting to eat; a condition resulting from not consuming enough food.

Slice of Pizza

A single triangular piece cut from a round pizza, typically topped with cheese, tomato sauce, and various toppings.