American Apparel has been in the news in recent months. Its board fired CEO Dov Charney amid

Question:

American Apparel has been in the news in recent months. Its board fired CEO Dov Charney amid several reports of his misdeeds. The company has also lost $270 million over the past three years. Last week, one of American Apparel's creditors, Lion Capital, called a $10 million loan it had made to American Apparel. ("Calling" a loan means that the loan has to be repaid immediately; creditors can call a loan when loan terms are violated if there is a call option in the original loan agreement.) An investment firm, Standard General, loaned $25 million to American Apparel to help it avoid bankruptcy for now. American Apparel will repay the $10 million it owes to Lion Capital and will still have funds left over for operating needs.
For additional information about Standard General's loan to American Apparel of $25 million, see Fortune, July 9, 2014, "Standard General gives American Apparel a $25 million lifeline."
Assume that Standard General has made a 10 year loan of $25 million to American Apparel. What is the impact on American Apparel's (assets, liabilities, and equity) of this loan?
Will this $25 million loan cause American Apparel's current ratio to increase, decrease or remain the same? Explain.
Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...