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Fundamentals of Financial Manageme...

15th Edition
Eugene F. Brigham + 1 other
ISBN: 9781337395250

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BuyFindarrow_forward

Fundamentals of Financial Manageme...

15th Edition
Eugene F. Brigham + 1 other
ISBN: 9781337395250
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 $4 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.

a.

Summary Introduction

To identify: The action(s) that will increase the cash balance on the balance sheet.

Balance sheet:

Balance sheet is a part of the financial statements that lists company’s assets, liabilities and shareholders’ fund. It is prepared at the end of the accounting period and informs about company’s financial position on that day.

Explanation
  • The common stocks are purchased by general public or investors and they pay the cash to the company who has issued those stocks...

b.

Summary Introduction

To identify: The action(s) that will increase the cash balance on the balance sheet.

Balance sheet:

Balance sheet is a part of the financial statements that lists company’s assets, liabilities and shareholders’ fund. It is prepared at the end of the accounting period and informs about company’s financial position on that day.

c.

Summary Introduction

To identify: The action(s) that will increase the cash balance on the balance sheet.

Balance sheet:

Balance sheet is a part of the financial statements that lists company’s assets, liabilities and shareholders’ fund. It is prepared at the end of the accounting period and informs about company’s financial position on that day.

d.

Summary Introduction

To identify: The action(s) that will increase the cash balance on the balance sheet.

Balance sheet:

Balance sheet is a part of the financial statements that lists company’s assets, liabilities and shareholders’ fund. It is prepared at the end of the accounting period and informs about company’s financial position on that day.

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