firm's new president wants to strengthen the company's financial position.Which of the following actions would make it financially stronger?

Question

Quizplus · Accepted Answer

Increasing EBIT (earnings before interest and taxes) while holding sales constant would make the company financially stronger by increasing its profitability. This would improve the company's ability to pay its debts and potentially provide funds for future growth opportunities.

All of the other options would weaken the company's financial position. Increasing accounts receivable, inventories, or notes payable would increase the company's debt and decrease its cash flow. Increasing accounts payable would decrease the company's cash flow and could harm relationships with suppliers.

Firm's New President Wants to Strengthen the Company's Financial Position