A company can improve its liquidity by increasing its accounts payable, while maintaining the other accounts constant.

Question

Quizplus · Accepted Answer

Increasing accounts payable means a company owes more to its suppliers, which might temporarily improve cash flow but does not inherently improve liquidity since it increases liabilities without increasing assets. Liquidity improvement requires increasing assets or reducing liabilities that are not related to financing (e.g., loans or accounts payable).

A Company Can Improve Its Liquidity by Increasing Its Accounts