Question

Looking forward to next year, if Baldwin's current cash balance is $25,719,453 and Cash Flows From Operations next period are unchanged from this period, which of the following activities will expose Baldwin to the most risk of needing an emergency loan? Retires $10,000,000 in Long-Term Debt Sells $10,000,000 of their Long-Term Assets Issues 10,000 shares of stock at the current stock price Purchases assets at a cost of $25,000,000

Answer 1

Answer:

Purchases assets at a cost of $25,000,000

Explanation:

The first three options are related to an increase in the cash available:

(A) takes a loan so cash increase

(B) sells assets so cash also increase

(C) issued shares, which also increase the cash available

while the purchase of assets will decrease cash. Exposing the company to a certain risk of needing a loan