How can businesses improve their liquidity position?

Improving a business's liquidity position involves ensuring that it has enough cash or liquid assets on hand to meet its short-term obligations. The correct choice highlights practical strategies that directly contribute to this goal.

Increasing cash reserves provides businesses with immediate funds that can be used to cover expenses, invest in opportunities, or respond to unforeseen financial challenges. Managing inventory effectively ensures that a business isn't tying up too much capital in unsold goods, allowing more cash to be available for operations. Additionally, speeding up accounts receivable collection means that funds owed by customers are received more quickly, improving cash flow.

These strategies collectively enhance a company's ability to manage day-to-day operations and unexpected expenses without facing liquidity issues. Such actions provide a stable financial foundation, increasing both operational efficiency and financial health, which are critical for sustained business growth.

In contrast, options that involve increasing long-term debt or reducing operational hours may not necessarily enhance liquidity, and while minimizing the workforce could reduce expenses, it does not directly improve cash flow or liquidity in the short term.