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Fundamentals of Financial Manageme...

14th Edition
Eugene F. Brigham + 1 other
ISBN: 9781285867977

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BuyFindarrow_forward

Fundamentals of Financial Manageme...

14th Edition
Eugene F. Brigham + 1 other
ISBN: 9781285867977
Textbook Problem

BALANCE SHEET Which of the following actions are most likely to directly increase cash as shown on a firm’s balance sheet? Explain and state the assumptions that underlie your answer.

  1. a. It issues $2 million of new common stock.
  2. b. It buys new plant and equipment at a cost of $3 million.
  3. c. It reports a large loss for the year.
  4. d. It increases the dividends paid on its common stock.

Summary Introduction

To Determine: The actions that is most likely to increase the cash shown in balance sheet of a firm.

Introduction: Balance sheet is a financial statement of an organization which incorporates liabilities, assets, equity capital, debt etc. It incorporates the assets on left side, and liabilities on the right side.

Explanation

The action that is most likely to increase the cash shown in balance sheet of a firm are as follows:

  • Statement A: It will raise money through the sale of common stock. Because selling of stock gives money through the financing activities.
  • Statement B: It will diminish the amount of money in the balance sheet of the organization...

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