1. Business
2. Accounting
3. Financial Accounting & Bookkeeping
4. Financial Ratios
5. 34856

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A firm has a current ratio of 1; in order to improve liquidity ratios, the firm might ______.

improve its collection practices, thereby increasing cash and increasing its current and quick ratios, improve its collection practices and pay accounts payable, thereby decreasing current liabilities and increasing its current and quick ratios, decrease current liabilities by utilizing more long-term debt, thereby increasing the current and quick ratios, or increase inventory, thereby increasing current assets ant the current and quick ratios

I believe - improve its collection practices and pay accounts payable, thereby decreasing current liabilities and increasing its current and quick ratios - is the best choice - please advise answer & why - thanks!