Which of the Following Actions Can a Firm Take to Increase

question 31

Multiple Choice

Which of the following actions can a firm take to increase its current ratio?

• A) Issue short-term debt and use the proceeds to buy back long-term debt with a maturity of more than one year.
• B) Reduce the company's days sales outstanding to the industry average and use the resulting cash savings to purchase plant and equipment.
• C) Use cash to purchase additional inventory.
• D) Statements a and b are correct.
• E) None of the statements above is correct.

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Definitions:

Reflex

An involuntary and automatic reaction or response to a stimulus.

Stimulus

An external factor or event that provokes a response or reaction from a biological organism or system.

Ganglia

Collections of neuron cell bodies outside the central nervous system.

Neuroglia

Structures that function as support cells for other neurons, including astrocytes, microglia, and oligodendrocytes; also called neuroglial cells.