Which one of these transactions will increase the liquidity of a firm?


Which one of these transactions will increase the liquidity of a firm? Multiple Choice Cash purchase of new production equipm

Answer

The Correct answer is Credit sale of inventory at cost

The Liquidity is the measure of how quickly the company can convert the Assets into cash, among the given options Credit sale of inventory will increase the debtor while the Inventory will be reduced leading to Higher liquidity because Debtor are considered to be more liquid as compared to the Inventory which is Not included while calculating Quick ratio.

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