Consider the following potential events that might have occurred to Global Conglomerate on December30, 2018. For eachone, indicate which line items inGlobal's balance sheet would be affected and by how much. Also indicate the change toGlobal's book value of equity.(In allcases, ignore any tax consequences forsimplicity.)

a. Global used $21 million of its available cash to repay $21 million of itslong-term debt.

b. A warehouse fire destroyed $7 million worth of uninsured inventory.

c. Global used $5 million in cash and $7 million in newlong-term debt to purchase a $12 million building.

d. A large customer owing $3 million for products it already received declaredbankruptcy, leaving no possibility that Global would ever receive payment.

e.Global's engineers discover a new manufacturing process that will cut the cost of its flagship product by over 60%.

f. A key competitor announces a radical new pricing policy that will drastically undercutGlobal's prices.

Question

a. Global used $21 million of its available cash to repay $21 million of itslong-term debt.

Long-term liabilities would ______(decrease/increase) by $ _____ million, and cash would _______(increase/decrease) by the same amount.

The book value of equity would be ___________.(unchanged/higher/lower).

Please give me the answer and explanation.

Answer rating: 100% (QA)

To determine the effect of Global Conglomerates actions on its balance sheet lets analyze each part ... View the full answer