Which of the following is an action company co-managers should seriously consider in trying to improve the company’s credit rating? You may wish to consult the discussion of the credit rating that appears on the Help screen for the Comparative Financial Performance page of the GSR in answering this question.
Reduce the length of the warranty periods on entry-level cameras and multi-featured cameras to 90 days (so as to reduce warranty costs); use the warranty cost savings to fund increases in quarterly advertising in all 4 geographic regions–the resulting increases in net income and EPS will help improve the company’s credit rating
Repurchase the maximum number of shares allowed each year (which will help lower the amounts paid out in dividends and thus help boost the company’s free cash flows and year-end cash balances)
Cut the prices the company charges for both entry-level and multi-featured cameras by at least 15% in all four geographic regions in order to improve the company’s market shares and grow revenues, net income, EPS and ROE–all of which will help boost the company’s credit rating Use the cash deposited in the company’s accumulated retained earnings account (see the company’s balance sheet) to pay back the loans outstanding on the company’s line of credit–this will lower interest costs
Strive to increase net income, which should help increase the company’s free cash flow (bigger free cash flows lower the number of years it takes to pay back the loans outstanding on the company’s line of credit)