Consider the following potential events that might have occurred to Global on December 30, 2019. For each one, indicate which line items in Global's balance sheet would be affected and by how much. Also indicate the change to Global's book value of equity. a. Global used $19.2 million of its available cash to repay $19.2 million of its long-term debt. b. A warehouse fire destroyed $4.7 million worth of uninsured inventory. c. Global used $4.9 million in cash and $5.4 million in new long-term debt to purchase a $10.3 million building. d. A large customer owing $3.1 million for products it already received declared bankruptcy, 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 more than 51%. f. A key competitor announces a radical new pricing policy that will drastically undercut Global's prices. c. Global used $4.9 million in cash and $5.4 million in new long-term debt to purchase a $10.3 million building.
Consider the following potential events that might have occurred to Global on December 30, 2019. For each one, indicate which line items in Global's balance sheet would be affected and by how much. Also indicate the change to Global's book value of equity. a. Global used $19.2 million of its available cash to repay $19.2 million of its long-term debt. b. A warehouse fire destroyed $4.7 million worth of uninsured inventory. c. Global used $4.9 million in cash and $5.4 million in new long-term debt to purchase a $10.3 million building. d. A large customer owing $3.1 million for products it already received declared bankruptcy, 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 more than 51%. f. A key competitor announces a radical new pricing policy that will drastically undercut Global's prices. c. Global used $4.9 million in cash and $5.4 million in new long-term debt to purchase a $10.3 million building.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Consider the following potential events that might have occurred to Global on December 30, 2019. For each one, indicate which line items in Global's balance sheet would be affected and by how much. Also indicate the change to Global's book value of equity.
a. Global used $19.2 million of its available cash to repay $19.2 million of its long-term debt.
b. A warehouse fire destroyed $4.7 million worth of uninsured inventory.
c. Global used $4.9 million in cash and $5.4 million in new long-term debt to purchase a $10.3 million building.
d. A large customer owing $3.1 million for products it already received declared bankruptcy, 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 more than 51%.
f. A key competitor announces a radical new pricing policy that will drastically undercut Global's prices.
c. Global used $4.9 million in cash and $5.4 million in new long-term debt to purchase a $10.3 million building. (Select the best choice below.)
Transcribed Image Text:Consider the following potential events that might have occurred to Global on December 30, 2019. For each one, indicate which line items in Global's balance
sheet would be affected and by how much. Also indicate the change to Global's book value of equity.
a. Global used $19.2 million of its available cash to repay $19.2 million of its long-term debt.
b. A warehouse fire destroyed $4.7 million worth of uninsured inventory,
c. Global used $4.9 million in cash and $5.4 million in new long-term debt to purchase a $10.3 million building.
d. A large customer owing $3.1 million for products it already received declared bankruptcy, 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 more than 51%.
f. A key competitor announces a radical new pricing policy that will drastically undercut Global's prices.
2
'al
O A. Inventory would increase by $4.7 million, and the book value of equity would decrease by the same amount.
O B. Inventory would decrease by $4.7 million, and the book value of equity would be unchanged.
-4
C. Inventory would decrease by $4.7 million, as would the book value of equity.
er (
O D. Inventory would increase by $4.7 million, as would the book value of equity.
12-4
c. Global used $4.9 million in cash and $5.4 million in new long-term debt to purchase a $10.3 million building. (Select the best choice below.)
O A. Long-term assets would decrease by $10.3 million, cash would increase by $4.9 million, and long-term liabilities would decrease by $5.4 million.
There would be no change to the book value of equity.
p Re
O B. Long-term assets would decrease by $10.3 million, cash would decrease by $4.9 million, and long-term liabilities would increase by $5.4 million.
There would be no change to the book value of equity.
s Ex
O C. Long-term assets would increase by $10.3 million, cash would decrease by $4.9 million, and long-term liabilities would increase by $5.4 million. There
would be no change to the book value of equity.
O D. Long-term assets would increase by $10.3 million, cash would increase by $4.9 million, and long-term liabilities would increase by $5.4 million. There
would be no change to the book value of equity.
The
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