Which of the following is NOT a situation that might lead a firm to increase its holdings of short-term marketable securities?
A) The firm must make a known future payment, such as paying for a new plant that is under construction.
B) The firm is going from its peak sales season to its slack season, so its receivables and inventories will experience a seasonal decline.
C) The firm is going from its slack season to its peak sales season, so its receivables and inventories will experience seasonal increases.
D) The firm has just sold long-term securities and has not yet invested the proceeds in operating assets.

Question

Quizplus · Accepted Answer

If the firm is going from its slack season to its peak sales season, its receivables and inventories will experience seasonal increases, which means the firm would not need to increase its holdings of short-term marketable securities. A, B, and D are all situations that could lead a firm to increase its holdings of short-term marketable securities.

Which of the Following Is NOT a Situation That Might