A chief financial officer has been tracking the activities of the companys nearest competitor for several years. Among other trends, the CFO has noticed that this competitor is able to take advantage of new technology and bring new products to market more quickly than the CFOs company. In order to determine the reason for this, the CFO has been reviewing the following data regarding the two companies:

	Company		Competitor
Accounts receivable turnover	6.85		7.35
Return on assets	15.34		14.74
Times interest earned	15.65		12.45
Current ratio	2.11		1.23
Debt/equity ratio	42.16		55.83
Degree of financial leverage	1.06		1.81
Price/earnings ratio	26.56		26.15

On the basis of this information, which one of the following is the best initial strategy for the CFO to follow in attempting to improve the flexibility of the company?

• A.Seek cost cutting measures that would increase the companys profitability.

• B.Increase the companys investment in short-term securities to increase the current ratio.

• C.Seek additional sources of outside financing for new product introductions.

• D.Investigate ways to improve asset efficiency and turnover times to improve liquidity.