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Borrow more. Shift short-term to long-term debt. Shift long-term to short-term debt. Sell common stock.
Selling the common stock is the right answer in the situation
Borrowing more will increase Debt as a result increases debt-equity ratio. So, option1 is wrong.
Short and long term debts, both are included in calculation of debt-equity ratio. Hence, shifting in debt nature will not have any effect on ratio. So, option2&3 is wrong.
Selling common stock will increase inflow of cash which can be used to repay the loan and reduce the debt burden as a result reduces the debt-equity ratio. So, option4 is right.
To improve this, the company should sell common stock.
Sell common stock.
>>>>>>>>>>>>. Sell common stock.
