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Consider the following potential events that might have occurred to Global Conglomerate on December 3 0 , 2 0 2 2 . For each one,
Consider the following potential events that might have occurred to Global Conglomerate on December For each one, indicate which line items in Globals balance sheet would be affected and by how much. Also indicate the change to Globals book value of equity.In all cases, ignore any tax consequences for simplicity.
a Global used $ million of its available cash to repay $ million of its longterm debt.
b A warehouse fire destroyed $ million worth of uninsured inventory.
c Global used $ million in cash and $ million in new longterm debt to purchase a $ million building.
d A large customer owing $ million for products it already received declared bankruptcy, leaving no possibility that Global would ever receive payment.
e Globals engineers discover a new manufacturing process that will cut the cost of its flagship product by over
f A key competitor announces a radical new pricing policy that will drastically undercut Globals prices.
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Part
a Global used $ million of its available cash to repay $ million of its longterm debt.
Longterm liabilities would
decrease
increase
by $
enter your response here million and cash would
decrease
increase
by the same amount. The book value of equity would be
unchanged
higher
lower
Select from the dropdown menus and round to the nearest integer.
Part
b A warehouse fire destroyed $ million worth of uninsured inventory.
Inventory would
decrease
increase
by $
enter your response here million as would the book value of equity. Select from the dropdown menus and round to the nearest integer.
Part
c Global used $ million in cash and $ million in new longterm debt to purchase a $ million building.
Longterm assets would
increase
decrease
by $
enter your response here million cash would
decrease
increase
by $
enter your response here million and longterm liabilities would
decrease
increase
by $
enter your response here million. There would be no change to the book value of equity.Select from the dropdown menus and round to the nearest integer.
Part
d A large customer owing $ million for products it already received declared bankruptcy, leaving no possibility that Global would ever receive payment.
Accounts payable
Accounts receivable
would
increase
decrease
by $
enter your response here million as would the book value of equity.Select from the dropdown menus and round to the nearest integer.
Part
e Globals engineers discover a new manufacturing process that will cut the cost of its flagship product by over Select the best choice below.
A
This event would increase the book value of equity by
B
This event would increase accounts receivable by
C
This event would not affect the balance sheet.
D
This event would decrease inventory by
Part
f A key competitor announces a radical new pricing policy that will drastically undercut Globals prices. Select the best choice below.
A
This event would increase accounts payable by the same percentage.
B
This event would decrease accounts receivable by the same percentage.
C
This event would decrease cash by the same percentage.
D
This event would not affect the balance sheet.
Longterm liabilities wouldby $by $million, and cash wouldmillion, and cash wouldby the same amount.The book value of equity would beSelect from the dropdown menus and round to the nearest integer.Inventory wouldby $by $Select from the dropdown menus and round to the nearest integer.Longterm assets wouldby $by $million, cash wouldmillion, cash wouldby $by $million, and longterm liabilities wouldmillion, and longterm liabilities wouldby $by $Select from the dropdown menus and round to the nearest integer.A large customer owing $ million for products it already received declared bankruptcy, leaving no possibility that Global would ever receive payment.wouldwouldby $by $Select from the dropdown menus and round to the nearest integer.
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