A firm's new president wants to strengthen the company's financial position. Which action 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. This means the company is generating more profit from its operations, which can be used to pay off debts or invest in growth opportunities. Increasing accounts receivable, accounts payable, or notes payable would not necessarily make the company stronger, as it could indicate an increase in debt or slower collection of cash from customers.

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