I have a small post I must complete on this scenario of American Apparel. This is not my strongest subject, I am not going to lie, and have been having a hard time with this. Are my answers below close to correct? Any assistance would help. Thank you.

American Apparel has been in the news in recent months. Its board fired CEO Dov Charney amid several reports of his misdeeds. The company has also lost $270 million over the past three years.Last week, one of American Apparels creditors, Lion Capital, called a $10 million loan it had made to American Apparel. (Calling a loan means that the loan has to be repaid immediately; creditors can call a loan when loan terms are violated if there is a call option in the original loan agreement.) An investment firm, Standard General, loaned $25 million to American Apparel to help it avoid bankruptcy for now. American Apparel will repay the $10 million it owes to Lion Capital and will still have funds left over for operating needs.

For additional information about Standard Generals loan to American Apparel of $25 million, see Fortune, July 9, 2014, "Standard General gives American Apparel a $25 million lifeline."

1.Assume that Standard General has made a 10 year loan of $25 million to American Apparel.What is the impact on American Apparels balance sheet (assets, liabilities, and equity) of thisloan?

The balance sheet would increase the liabilitiesportion by $25 million as well as assets. I was not sure in regards to liabilities???

2.Will this $25 million loan cause American Apparels current ratio to increase, decrease orremain the same? Explain.

The 25 million dollar loan would cause American Apparels current ratio to increase. Not sure if this is correct??? But need to provide a reasonable explanation of why.

3.Now assume that American Apparel issued stock to Standard General in exchange for the $25million. What would have been the impact on American Apparels balance sheet (assets,liabilities, and equity) of this loan? Would this equity transaction have affected AmericanApparels current ratio any differently than if Standard General had made a 10 year loaninstead? Explain.

Not sure on the outcome of the impact but I think it not affect the current ratio, but again will need to provide a decent explanation. But I am not sure.