Which of the following actions is an example of "window dressing?" a. Using some of the firm's cash to reduce long-term debt. b. Any action that does not improve a firm's fundamental long-run position and thus increases its intrinsic value. c. Offering discounts to customers who pay with cash rather than buy on credit and then using the funds that come in quicker to purchase fixed assets. d. Borrowing on a long-term basis and using the proceeds to retire short-term debt. e. Borrowing by using short-term notes payable and then using the proceeds to retire long-term debt.

Question

Computers & Technology

Ronald Anthony

Today, 19:10

Which of the following actions is an example of "window dressing?" a. Using some of the firm's cash to reduce long-term debt. b. Any action that does not improve a firm's fundamental long-run position and thus increases its intrinsic value. c. Offering discounts to customers who pay with cash rather than buy on credit and then using the funds that come in quicker to purchase fixed assets. d. Borrowing on a long-term basis and using the proceeds to retire short-term debt. e. Borrowing by using short-term notes payable and then using the proceeds to retire long-term debt.

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Answers (1)

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Carmelo Ray · Answer 1

Option D is the correct option.

Explanation:

Window dressing is the type of process by which a firm provides the improvement in fundamental or long-run positions and also they develop their basic values. It does not use the assets of the firm to minimize the long-term debt. So, that's why It borrows the long-term debts through retire the short-term debt that maintain the present ratio of the firm.