FIN 534 Homework Chapter 3

Directions: Answer the following five questions on a separate document. Explain how you reached the answer or show your work if a mathematical calculation is needed, or both. Submit your assignment using the assignment link in the course shell. Each question is worth five points apiece for a total of 25 points for this homework assignment.

1.A firm wants to strengthen its financial position. Which of the following actions would increase its quick ratio?

a. Issue new common stock and use the proceeds to acquire additional fixed assets.

b. Offer price reductions along with generous credit terms that would (1) enable the firm to sell some of its excess inventory and (2) lead to an increase in accounts receivable.

c. Issue new common stock and use the proceeds to...