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Galina-37 [17]
3 years ago
15

If Chester's current cash balance is $26,337 (000) and Cash Flows From Operations next period are unchanged from this period, wh

ich of the following activities will expose Chester to the most risk of needing an emergency loan?
a. Issues 10,000 shares of stock at the current stock price
b. Sells $10,000,000 of their Long-Term Assets
c. Purchases assets at a cost of $25,000,000
d. Retires $10,000,000 in Long-Term Debt
Business
1 answer:
JulijaS [17]3 years ago
7 0

Answer:

The correct option is c. Purchases assets at a cost of $25,000,000.

Explanation:

An emergency loan can be described as a loan that can obtained on short notice by a borrower in to cover unexpected costs.

From the options, purchasing assets at a cost of $25,000,000 will leave Chester in a serious liquidity position as the it will take 94.92% [i.e. ($25,000,000 / $26,337,000) * 100] of its current cash balance and leave the company with just $1,337 current cash balance.

Because the next period's Cash Flows From Operations are expected to be the same as this period's, purchasing assets at a cost of $25,000,000 puts Chester at the greatest danger of needing an emergency loan.

Therefore, the correct option is c. Purchases assets at a cost of $25,000,000.

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3 0
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One of the benefits of a next actions list is that it
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5 0
2 years ago
The population of the world in 1987 was 5 billion and the relative growth rate was estimated at 2 percent per year. assuming tha
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6 0
3 years ago
You just sold 900 shares of Alcove stock at a price of $34.08 a share. Last year you paid $39.20 a share to buy this stock. You
ehidna [41]

Answer:

d. -$4,608

Explanation:

The computation of the total capital gain is shown below:

Total capital gains is

= (End value - Beginning value) × 900 shares

= ($34.08 - $39.20) × 900 shares

= -$4,608

Hence, the  total capital gain on this investment is -$4,608

Therefore the option d is correct

And, the same is to be relevant

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