Which of the following will improve liquidity? (Select all that apply.) A compan

Question

Which of the following will improve liquidity? (Select all that apply.) A company purchases a new truck with cash. A company receives cash from taking out a long-term loan that is due in five years. A company substantially increases credit sales and expects to collect all of the credit sales in the current account period. A company purchases inventory on credit but is having trouble selling the inventory as most of it has become obsolete. A company took out a long-term loan four years ago. The loan is due next month.

Explanation / Answer

Answer

B) A company receives cash from taking out a long term loan due in five years

Explanation : Improving liquidity means increase in cash in hand in order to meet the working capital requirements . When a company receives cash out a long term loan , its cash in hand increases & it will also improves the liquidity of the company if the cash is used to pay current liabilities.

Why others options are incorrect : -

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