Which of the following actions are most likely to directly increase cash as show

ID: 2615641 • Letter: W

Question

Which of the following actions are most likely to directly increase cash as shown on a firm’s balance sheet?

It reduces the dividends paid on its common stock.

It buys new plant and equipment at a cost of $3 million.

It reports a large loss for the year. (Assume the loss is not due to a large depreciation expense.)

It repurchases $3 million of its own common stock.

It reduces the dividends paid on its common stock.

It buys new plant and equipment at a cost of $3 million.

It reports a large loss for the year. (Assume the loss is not due to a large depreciation expense.)

It repurchases $3 million of its own common stock.

a.It reduces the dividends paid on its common stock.

Paying lower dividends will help in increasing the cash balance.

Buying new plant and equipment will decrease the cash balance.

Reporting a large loss (other than depreciation expense) might reduce cash balance.

Repurchasing commonstock directly reduces cash balance.

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.