LG Electronics is planning to invest in additional machinery facilities. To determine investment conditions, select two...

LG Electronics is planning to invest in additional machinery facilities. To determine investment conditions, select two accounting subjects for the financial statements you want to look at and explain why.

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Expert Solution

By, "Investing in additional Machinary Facility" , i am assuming LG Electronics is planning to aquire another company.

Two accounting subjects for the financial statements that i want to look at are :-

1) Debt-

How much amount is owed by the company to others will be a crucial factor on deciding which facilities to aquire. Noone wants to buy a facility which owes too much debt to others. Debt acts as a hurdle in the growth of company. Huge debt payment eats up the cash of the company.

2) Cash Flow

Cash flow refers to the net inflow of cash which a business earns. Availability of cash means that company will be able to meet up unexpected problems which might come in future. If net cash flow during the life of project from our investment is negative then there is no point of making investment.

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jeff jeffy answered 1 year ago

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