Question
if the company decided to use the freed up cash 261,180to buy new fixed asset . effect on total asset effect on current asset :
if the company decided to use the freed up cash 261,180to buy new fixed asset . effect on total asset effect on current asset :
- effect on cash - no effect - effect on AR - decrease by freed up cash - effect on inventory - no effect effect on fixed asset : increase in fixed asset by freed up cash
effect on liabilities - no effect effect on OE - no effect Effect on total liabilities and TOE
2- If the company uses freed up cash to pay its short term liabilities
effect on total asset decrease on total asset by freed up cash
effect on current asset -effect on cash no effect -effect on inventory no effect -effect on AR decrease by freed up cash
effect on fixed asset -no effect
Effect on debt or liabilities ( same ) - decrease in total liability by freed up cash effect on OE -no effect
3- If the company uses the freed up cash to call back its shares repurchasing its own shares -effect Total asset decrease on freed up cash Effect on current asset -effect on cash no effect _ effect on AR decrease by freed up cash _effect on inventory no effect
-Effect on fixed asset no effect
-Effect on liabilities no effect
Effect on OE decrease by freed up cash
Effect on TL and TOE decrease by freed up cash
Rewrite the simplified balance sheet according to the 3 diff examples assuming that day sales outstanding to reach 28 days
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