Looking forward to next year, if Baldwin’s current cash balance is $17,334 (000) and cash flows from operations next period are unchanged from this period and Baldwin takes ONLY the following actions relating to cash flows from investing and financing activities: Issues 100 (000) shares of stock at the current stock price Issues $200 (000) of long-term debt Pays $40 (000) in dividends Which of the following activities will expose Baldwin to the most risk of needing an emergency loan? Select: 1Save Answer Sells $5,000 (000) of their Long-term assets Purchases assets at a cost of $15,000 (000) Retires $20,000 (000) in long-term debt Liquidates the entire inventory

The activity that will expose Baldwin to the most risk of needing an emergency loan is:

Retires $20,000 (000) in long-term debt

Explanation:

If Baldwin wants to retire the long-term debt of $20 million, it requires an emergency loan because the available cash is not enough to settle the long-term debt.  Emergency loans charge higher interest rates.  Given the risk of debt default, putting itself in the position of having to retiring $20 million at a time is not so palatable.  Such long-term debts are better retired with long-term finance sources, like issuing shares.

Rent expense, land purchased, utility, salary expense, accounts payable, dividend, salaries, insurance---that is your expense for the year. Look at your income is Retained earning, accounts receivable, service revenue, common stock. Add all the expense and subtract from earning that will be your net income.