Actions would increase its current ratio
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A firm wants to strengthen its financial position. Which of the following actions would increase its current ratio?
I'm choosing e because of the fact that they can pay off the long-term debt and put themselves in a position of holding onto short-term debt. Is this correct?
a) Use cash to increase inventory holdings.
b) Issue new stock and then use some of the proceeds to purchase additional inventory and hold the remainder as cash.
c) Reduce the company's days' sales outstanding to the industry average and use the resulting cash savings to purchase plant and equipment.
d) Use cash to repurchase some of the company's own stock.
e) Borrow using short-term debt and use the proceeds to repay debt that has a maturity of more than one year.
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Solution Summary
This brief solution explains the correct option from the given financial alternatives. The solution is 73 words in length and goes over several of the options stated in the question.
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The correct answer would be
b) Issue new stock and then use some of the proceeds to purchase additional ...
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