Question 18 Which of the following is NOT a situation that might lead a firm to

Question

Question 18 Which of the following is NOT a situation that might lead a firm to increase its holdings of short-term marketable securities? Answer The firm must make a known future payment, such as paying for a new plant that is under construction. The firm is going from its peak sales season to its slack season, so its receivables and inventories will experience a seasonal decline. The firm is going from its slack season to its peak sales season, so its receivables and inventories will experience seasonal increases. The firm has just sold long-term securities and has not yet invested the proceeds in operating assets. The firm just won a product liability suit one of its customers had brought against it.

Explanation / Answer

The firm is going from its peak sales season to its slack season, so its receivables and inventories will experience a seasonal decline.

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