A Firm Wants to Strengthen Its Financial Position

question 22

Multiple Choice

A firm wants to strengthen its financial position.Which action would increase its current ratio?

• A)Use cash to repurchase some of the company's own stock.
• B)Borrow using short-term debt and use the proceeds to repay debt that has a maturity of more than 1 year.
• C)Issue new stock and then use some of the proceeds to purchase additional inventory and hold the remainder as cash.
• D)Use cash to increase inventory holdings.

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Definitions:

Flexibility

The ability to adapt to new, different, or changing requirements and situations.

Time Urgency

A feeling of pressure to complete tasks and meet deadlines quickly, often associated with stress and a hallmark of Type A personality traits.

Belief System

A set of principles or tenets that form the foundation of a person's understanding of the world, guiding behavior and thought.

General Adaptation Syndrome

A theoretical framework describing the body's short-term and long-term reactions to stress, proposed by Hans Selye.