Looking forward to next year, if Digby’s current cash balance is $17,478 (000) a

Question

Looking forward to next year, if Digby’s current cash balance is $17,478 (000) and cash flows from operations next period are unchanged from this period, and Digby takes ONLY the following actions relating to cash flows from investing and financing activities:


Issues 100 (000) shares of stock at the current stock price
Issues $400 (000) in bonds
Retires $10,000 (000) in debt

Which of the following activities will expose Digby to the most risk of needing an emergency loan? Select: 1 Purchases assets at a cost of $25,000 (000) Sells $10,000 (000) of their long-term assets Liquidates the entire inventory Pays a $5.00 per share dividend Looking forward to next year, if Digby’s current cash balance is $17,478 (000) and cash flows from operations next period are unchanged from this period, and Digby takes ONLY the following actions relating to cash flows from investing and financing activities:


Issues 100 (000) shares of stock at the current stock price
Issues $400 (000) in bonds
Retires $10,000 (000) in debt

Which of the following activities will expose Digby to the most risk of needing an emergency loan? Select: 1 Purchases assets at a cost of $25,000 (000) Sells $10,000 (000) of their long-term assets Liquidates the entire inventory Pays a $5.00 per share dividend

Explanation / Answer

Purchases assets at a cost of $25,000 (000)

since it results in more cash outflow

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