Which of the Following Is NOT a Situation That Might

question 65

Multiple Choice

Which of the following is NOT a situation that might lead a firm to increase its holdings of short-term marketable securities?

• A) The firm must make a known future payment,such as paying for a new plant that is under construction.
• B) The firm is going from its peak sales season to its slack season,so its receivables and inventories will experience a seasonal decline.
• C) The firm is going from its slack season to its peak sales season,so its receivables and inventories will experience seasonal increases.
• D) The firm has just sold long-term securities and has not yet invested the proceeds in operating assets.
• E) The firm just won a product liability suit one of its customers had brought against it.

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Definitions:

Financial Statement Analysis

The process of examining and analyzing a company's financial statements to make better economic decisions.

External Users

Individuals or entities outside a company, such as investors or creditors, who rely on company financial information to make decisions.

Internal Users

Individuals within an organization who use accounting information for decision-making, including managers and employees.

Days' Sales Uncollected

A financial metric indicating the average number of days it takes a company to collect payment after a sale has been made, used as an indicator of the efficiency of a company's credit and collection policies.