Which of the following actions can a firm take to increase its current ratio?A. Issue short-term debt and use the proceeds to buy back long-term debt with a maturity of more than one year. 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 purchase additional inventory. D. Statements a and b are correct. E. None of the statements above is correct.

In a business entity, current ratio will be helps to evaluate its ability to pay off short-term…

Answered: Which of the following actions can a…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Which of the following actions can a firm take to increase its current ratio?

A. Issue short-term debt and use the proceeds to buy back long-term debt with a maturity of more than one year.
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 purchase additional inventory.
D. Statements a and b are correct.
E. None of the statements above is correct.

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