Which of the Following Actions Will Increase a Company's Quick

question 35

Multiple Choice

Which of the following actions will increase a company's quick ratio?

• A) Reduce inventories and use the proceeds to reduce long-term debt.
• B) Reduce inventories and use the proceeds to reduce current liabilities.
• C) Issue short-term debt and use the proceeds to purchase inventory.
• D) Issue long-term debt and use the proceeds to purchase fixed assets.
• E) Issue equity and use the proceeds to purchase inventory.

---

Definitions:

Payroll

The total amount of wages paid by a company to its employees for a set period of time.

Known Liability

Obligations or debts that have been incurred and are measurable with a high degree of certainty.

Vacation Benefits

Employee benefits that provide paid or unpaid time off from work for holidays, vacations, and personal time.

Times Interest Earned

A financial ratio that measures a company's ability to meet its debt obligations by comparing its interest expense to its earnings before interest and taxes.