Looking forward to next year, if Chester’s current cash balance is $17,478 (000) and cash flows from operations next period are unchanged from this period, and Chester 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 $400 (000) in bonds
Retires $10,000 (000) in debt

Which of the following activities will expose Chester to the most risk of needing an emergency loan?

A. Pays a $5.00 per share dividend
B. Purchases assets at a cost of $25,000 (000)
C. Sells $10,000 (000) of their long-term assets
D. Liquidates the entire inventory

The first two options are outflows that will reduce the liquidity position of the company. Payment of $5.00 dividend per share costs the company $500,000 while purchase of assets costs the company $25,000,000. Since the purchase of assets costs the company a higher outflow, thus, it will expose the company most to the risk of needing emergency loan.

ayokenny2001 ayokenny2001 · Answer 2 · 2022-05-06T12:51:54+02:00

The activities would expose Chester to the most risk of needing an emergency loan is the purchase of assets at a cost of $25,000,000.

What is cash flow?

Cash flow in finance and accounting refers to the capital inflows and outflows of specific economic units in order to achieve a specific purpose within a certain period of time

We know that since the purchase of assets costs the company a higher outflow, it will expose the company most to the risk of needing emergency loan.

Learn more about cash flow here : https://brainly.com/question/10922478

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