EBK PRINCIPLES OF CORPORATE FINANCE
EBK PRINCIPLES OF CORPORATE FINANCE
12th Edition
ISBN: 9781259358487
Author: BREALEY
Publisher: MCGRAW HILL BOOK COMPANY
bartleby

Videos

Textbook Question
Book Icon
Chapter 29, Problem 1PS

Sources and uses of cash State whether each of the following events is a source or use of cash, or neither.

  1. a. An automobile manufacturer increases production in response to a forecasted increase in demand. Unfortunately, the demand does not increase.
  2. b. Competition forces the firm to give customers more time to pay for their purchases.
  3. c. Rising commodity prices increase the value of raw material inventories by 20%.
  4. d. The firm sell s a parcel of land for $100,000. The land was purchased five years earlier for $200,000.
  5. e. The firm repurchases its own common stock.
  6. f. The firm doubles its quarterly dividend.
  7. g. The firm issues $1 million of long-term debt and uses the proceeds to repay a short-term bank loan.
Expert Solution & Answer
Check Mark
Summary Introduction

To determine: Whether each events is a source or application of cash or neither.

Explanation of Solution

Following table showing whether each events is a source or application of cash or neither:

Item nameSource or applicationReason
aApplicationInventory increases and cash decreases(once supplier has been settled)
bApplicationAccounts receivable will raise while cash balance declines.
cNo changeStock is recorded at cost and not in the market value.
dSourceLong term asset will decrease, cash will increase and equity declines( by the post-tax capital loss)
eApplicationThe cash will decrease while the treasury stock balance increases.
fApplicationCash balance will decrease if the retrained earnings balance decrease.
gNo changeLong-term debt and short-term debt are in inverse relationship. That is if the long term debt increases the short term debt will get decrease.

Table (1)

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
Which of the following is considered a long-term source of finance for a business? A) Trade credit B) Short-term bank loan C) Issue of shares D) Overdraft
What is the primary purpose of financial management? a) Maximizing profitsb) Minimizing expensesc) Maximizing shareholder wealthd) Ensuring employee satisfaction
I need help!! 2. Which of the following is a short-term source of finance? a) Bondsb) Equity sharesc) Trade creditd) Debentures
Knowledge Booster
Background pattern image
Finance
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Similar questions
SEE MORE QUESTIONS
Recommended textbooks for you
Text book image
Essentials Of Investments
Finance
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Mcgraw-hill Education,
Text book image
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:9781260013962
Author:BREALEY
Publisher:RENT MCG
Text book image
Financial Management: Theory & Practice
Finance
ISBN:9781337909730
Author:Brigham
Publisher:Cengage
Text book image
Foundations Of Finance
Finance
ISBN:9780134897264
Author:KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:Pearson,
Text book image
Fundamentals of Financial Management (MindTap Cou...
Finance
ISBN:9781337395250
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Cengage Learning
Text book image
Corporate Finance (The Mcgraw-hill/Irwin Series i...
Finance
ISBN:9780077861759
Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:McGraw-Hill Education
Why do we need accounting?; Author: EconClips;https://www.youtube.com/watch?v=weCXE2wIl90;License: Standard Youtube License