Which of the following actions would improve a firm's liquidity?
A) repurchasing stock
B) selling bonds and increasing cash
C) buying bonds
D) increasing the company's dividend payments

Question

Quizplus · Accepted Answer

Selling bonds and increasing cash would improve a firm's liquidity by increasing their available cash reserves. Repurchasing stock or buying bonds would decrease a firm's liquidity as it would tie up available cash. Increasing dividend payments may satisfy shareholders, but it could also decrease a firm's available cash and ultimately harm their liquidity.

Which of the Following Actions Would Improve a Firm's Liquidity