A Firm Wants to Strengthen Its Financial Position

question 68

Multiple Choice

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

• A) 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.
• B) Issue new common stock and use the proceeds to increase inventories.
• C) Speed up the collection of receivables and use the cash generated to increase inventories.
• D) Use some of its cash to purchase additional inventories.
• E) Issue new common stock and use the proceeds to acquire additional fixed assets.

---

Definitions:

Marketing Strategy

A corporation's main roadmap for engaging prospective buyers and making them purchasers of its products or services.

Sales Declining

A situation in which a company or product experiences a downward trend in sales figures over a certain period.

Profit Margin

A financial metric indicating the percentage of revenue that exceeds the cost of goods sold, reflecting the profitability of a company.

Marketing Expenditures

The total amount of money spent on activities aimed at promoting and selling a product or service.