BP Replaces Hayward, Quickens Asset Sales on Record Loss

Source: Lead Story-Dateline: Swint, Brian and Eduard Gismatullin, "BP Replaces Hayward, Quickens Asset Sales on Record Loss," Bloomberg.com,

https://www.bloomberg.com/news/articles/2010-07-27/bp-reports-record-quarterly-loss-on-oil-spill-as-dudley-replaces-hayward

Summary: Key Points in the Article

British Petroleum is taking steps to increase the company's liquidity and improve its image. The board of directors recently announced the appointment of U.S. native Robert Dudley as the company's new CEO. Hayward, BP's outgoing CEO, drew the public's ire over his handling of the disaster and announced he was stepping down "for the good of BP."

BP officials also indicate the company would "accelerate asset sales" in order to generate cash for Gulf cleanup and liability. The company estimates the Gulf disaster-related costs will exceed $32 billion. In addition to selling assets the company already announced it would cut the dividend and was reducing new investments in order to provide liquidity. The company's stock fell 2.6 percent on the news and is down nearly 40 percent since the rig exploded on April 20th.

Multiple Choice Questions

1. Companies primarily invest in assets that generate.

A. investment options

B. liabilities

C. cash flows

D.none of these

2. CEOs are appointed by a company's.

A. board of directors

B. bondholders

C. shareholders

D. none of the above

3. Companies can free up cash in the short-term by ____________and _____________

A. eliminating board members; buying productive assets

B. reducing dividends; selling assets

C. reducing liabilities; investing in assets

D. none of the above