Which action most directly reduces the risk that a business cannot meet short-term obligations?
Correct answer: B. Maintaining adequate liquid current assets
- A. Increasing investment in long-term machinery
- B. Maintaining adequate liquid current assets
- C. Replacing equity with additional fixed debt
- D. Extending the useful life of existing equipment
Explanation
Cash and other liquid current assets can be used to settle short-term liabilities as they fall due. More machinery or fixed debt does not directly improve the firm's immediate liquidity position.
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