Which of the following actions can a firm take to make its cash flow look better in any given year?

Question

Quizplus · Accepted Answer

By delaying payments to suppliers, a firm can temporarily increase its cash balance, improving its cash flow in any given year. However, this is not a sustainable solution as it may harm the firm's relationship with its suppliers in the long run. Increasing inventory or offering more liberal credit terms to customers may lead to increased sales and revenue, but they do not directly improve cash flow in the short term. Therefore, option C is the best choice as it directly impacts the cash balance. By delaying payments to suppliers, a firm can hold onto its cash for longer and make its cash flow look better in the short term. However, this is not a sustainable or recommended practice as it may damage relationships with suppliers and have negative long-term consequences. Increasing inventory or offering liberal credit terms to customers may temporarily boost sales or revenue but does not necessarily improve cash flow.

Which of the Following Actions Can a Firm Take to Make