A Firm Wants to Strengthen Its Financial Position

question 46

Multiple Choice

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

• A) Use cash to increase inventory holdings.
• 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 repurchase some of the company's own stock.
• D) Borrow using short-term debt and use the proceeds to repay debt that has a maturity of more than one year.
• E) Issue new stock and then use some of the proceeds to purchase additional inventory and hold the remainder as cash.

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Definitions:

Continuum

A continuous sequence in which adjacent elements do not vary significantly from each other, but the extremes are quite distinct.

Perceived Value

The evaluation by individuals of the worth or desirability of a product, service, or experience based on their personal beliefs and experiences.

Demonstrating Real Value

The act of showing the tangible benefits and effectiveness of something, often in a business or service context.

Human Capital

Represents the collective skills, knowledge, or other intangible assets of individuals that can be used to create economic value for the individuals, their employers, or their community.