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The Heakhwork Corporation claims that it has reduced its outstanding

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MahmoudFawzy
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The Heakhwork Corporation claims that it has reduced its outstanding [#permalink] New post   19 Oct 2019, 10:47
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62% (01:35) correct 38% (01:36) wrong based on 522 sessions
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The Healthwork Corporation claims that it has reduced its outstanding debt through buying back loans. Of the 24 outstanding loans, Healthwork Corp. has bought back 13. Therefore the company is less indebted than it was before.

On which of the following propositions is the claim above regarding Healthwork Corp.'s indebtedness dependent?

(A) The eleven remaining lows do not constitute the bulk of Healthwork Corp.'s outstanding debt.

(B) The 13 loans that Healthwork had bought back were not held by the original issuers, but rather by third-party purchasers.

(C) If the loans are fully redeemed, Healthwork Corp.'s financial situation will be secure.

(D) The buyback has been financed from revenues earned by the company rather that leveraged.

(E) If Healthwork Corp. does not redeem the loans, it will risk bankruptcy.
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Abhishek009
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Re: The Heakhwork Corporation claims that it has reduced its outstanding [#permalink] New post   19 Oct 2019, 11:38
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MahmoudFawzy wrote:
The Healthwork Corporation claims that it has reduced its outstanding debt through buying back loans. Of the 24 outstanding loans, Healthwork Corp. has bought back 13. Therefore the company is less indebted than it was before.

On which of the following propositions is the claim above regarding Healthwork Corp.'s indebtedness dependent?

(A) The eleven remaining lows do not constitute the bulk of Healthwork Corp.'s outstanding debt.

(B) The 13 loans that Healthwork had bought back were not held by the original issuers, but rather by third-party purchasers.

(C) If the loans are fully redeemed, Healthwork Corp.'s financial situation will be secure.

(D) The buyback has been financed from revenues earned by the company rather that leveraged.

(E) If Healthwork Corp. does not redeem the loans, it will risk bankruptcy.


Out of 24 loans , 13 have been repaid and therefore leads to the conclusion that the company is less indebted than it was before.

Prethinking : The firm has not raised other loans equall to / more than the loan repaid.

(A) This option is not relevant , so what if the 11 loans now constitute bulk of the total loan, it may be possible that now the firm is 0.01 % less indebted.
(B) Loans held by issuers , third party - Completely out of scope.
(C) Financial security is not our concern , conclusion talks only about less indebtness.
(D) In line with our prethinking - Suggests that the firm has not raised further Loan to repay the 13 Loans - Classic assumption condition opening / closing of shops scenario.
(E) Bankruptcy - Out of scope.

Hence, Correct Answer must be (D)
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Re: The Heakhwork Corporation claims that it has reduced its outstanding [#permalink] New post   22 Sep 2023, 05:15
May be I didn't quite get the language of the question stem.

I chose A because if 11 remaining loans make up for the bulk then the company is less indebted i.e. less in loss.

Why is D correct and A is wrong?

According to me, it is an Assumption question.
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Re: The Heakhwork Corporation claims that it has reduced its outstanding [#permalink] New post   26 Sep 2023, 09:11
cigarboy wrote:
May be I didn't quite get the language of the question stem.

I chose A because if 11 remaining loans make up for the bulk then the company is less indebted i.e. less in loss.

Why is D correct and A is wrong?

According to me, it is an Assumption question.



Because even if they’ve bought back 13 of the loans, it is nowhere mentioned that there is no possibility of them having leveraged more loans. It is also nowhere mentioned how they paid back the 13, giving room for the possibility that they took more loans to pay off previous ones.
While D talks about it, A shuns it’s possibility.

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Re: The Heakhwork Corporation claims that it has reduced its outstanding [#permalink]
26 Sep 2023, 09:11
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