baldwin currently has $20,201 (000) in cash and management has decided to issue stocks and bonds worth an additional $8,000 (000). assuming that cash from operations will be the same for each of the following activities, which activity exposes this company to the most risk of being issued an emergency loan?
a) A $5 dividend
b) Liquidate the entire inventory
c) Retiring the oldest bond
d) Purchasing $18,000 (000) worth of plant and equipment

Respuesta :

The correct option is d) Purchasing $18,000 (000) worth of plant and equipment.

Purchasing $18,000 (000) worth of plant and equipment exposes Baldwin to the most risk of being issued an emergency loan as this activity requires the largest outlay of cash. This large expenditure of cash could put Baldwin in a precarious financial position, leaving it short of capital and in need of an emergency loan to fulfil its financial obligations.

Capital is a broad term that can describe anything that confers value or benefit to its owners, such as a factory and its machinery, intellectual property like patents, or the financial assets of a business or an individual.

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