Armbrust Corporation is the maker of fine fitness equipment. Armbrust's bank has been pressuring the firm to improve its liquidity. Which of the followingactions proposed by the CFO do you believe will actually achieve this objective?a. Sell new equity and use the proceeds to purchase a new plant site.-Select-b. Use cash and marketable securities to pay off short-term bank borrowings and accounts payable.-Select- vc. Borrow long-term and use the proceeds to pay off short-term debt.-Select- vd. Sell surplus fixed assets and invest the proceeds in marketable securities.-Select- V

Liquidity is firms ability to pay short term liablitity using short term asset i.e using current asset to pay off current liability. Increase in liquidity means increase in current asset and decrease in current liability. a. Selling new equity and buying new plant site will no increase current asset and decrease current liability. b.Use cash to payoff short term debt will not increase liquidity, it will decrease liquidity as cash (current asset) decreases. c.Borrow long term loan to pay off short term debt. This action will increase cash but also increase the Debt of the firm. d. Sell surplus fixed asset and invest in Market securities will increase current assets and which will be readility available at time of repayment of current liability and in there will be no negative effect of selling fixed asset as it is Surplus fixed asset.answer: D. Sell surplus fixed asset and invest the proceeds in market securities.

Business

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Armbrust Corporation is the maker of fine fitness equipment. Armbrust's bank has been pressuring the firm to improve its liquidity. Which of the following actions proposed by the CFO do you believe will actually achieve this objective? a. Sell new equity and use the proceeds to purchase a new plant site. b. Use cash and marketable securities to pay off short-term bank borrowings and accounts payable. -Select- c. Borrow long-term and use the proceeds to pay off short-term debt. -Select- v -Select- v d. Sell surplus fixed assets and invest the proceeds in marketable securities. -Select-

Armbrust Corporation is the maker of fine fitness equipment. Armbrust's bank has been pressuring the firm to improve its liquidity. Which of the following actions proposed by the CFO do you believe will actually achieve this objective? a. Sell new equity and use the proceeds to purchase a new plant site. b. Use cash and marketable securities to pay off short-term bank borrowings and accounts payable. -Select- c. Borrow long-term and use the proceeds to pay off short-term debt. -Select- v -Select- v d. Sell surplus fixed assets and invest the proceeds in marketable securities. -Select-

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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