Respuesta :
Answer:
a. Global used $ 21 million of its available cash to repay $ 21 million of its long-term debt.
With this both cash and long term debt is reduced as liability settled through cash.
Assets and liabilities both reduced by $21 million, and no impact on book value of equity.
b. A warehouse fire destroyed $ 5 million worth of uninsured inventory.
This will decrease inventory that is assets by $5 million and at the same time because of loss, book value of equity will also decrease by $5 million.
c. Global used $ 4 million in cash and $ 6 million in new long-term debt to purchase a $ 10 million building.
This will decrease cash which is an asset by $4 million and increase asset that is building by $10 million, and will increase long term debt being liability by $6 million.
There will be no impact on book value of equity.
d. A large customer owing $ 2 million for products it already received declared bankruptcy, leaving no possibility that Global would ever receive payment.
This will decrease the balance of accounts receivables by $2 million and will accordingly decrease the book value of equity.
e. Global's engineers discover a new manufacturing process that will cut the cost of its flagship product by over 55 %.
This will not the balance sheet in any manner, as it will impact the upcoming income statement and also will not impact the book value of equity.
f. A key competitor announces a radical new pricing policy that will drastically undercut Global's prices.
This will not impact the current balance sheet and will also not impact the book value by any means, because this will impact only the income statement to be formed after such change in price.
