Investing in additional marketable securities and inventories creates higher profitability and lower liquidity.

Question

Quizplus · Accepted Answer

Investing in additional marketable securities may increase liquidity by providing assets that can be quickly converted into cash, but investing in inventories can decrease liquidity since it ties up cash in physical goods. Both actions do not directly lead to higher profitability; profitability depends on the company's ability to generate income from its investments.

Investing in Additional Marketable Securities and Inventories Creates Higher Profitability