Debt/Equity financing and financial statements
Hi guys,
Just had a quick question please.
If a company raises finance through equity, does this show up in any way on the income statement. I understand it'll be under 'Share Capital' under Shareholders Equity of the balance sheet and that it'll increase cash flow from financing and so net cash flow in the CF statement. Just not too sure on the effect on the income statement.
If a company raises finance through debt, does this show up in any way on the income statement. I understand it'll be under Liabilities of the balance sheet and that it'll increase cash flow from financing and so net cash flow in the CF statement. Just not too sure on the effect on the income statement. I understand debt interest repayments will show up under EXPENSES on the income statement over time.
Thank you so much for your help.
No and No.
Both scenarios result in an increase in cash, and increase in equity or liabilities. It's also likely the associated debt/equity issuance costs (legal fees incurred) would get capitalized and added onto the balance sheet.
Thanks for the response, I had that question
Another quick questions about financial statements please:
What is the difference between operating income and operating profit?
I'm defining operating income as Revenue from business operations - operating expenses (including cost of goods sold).
This is the same definition as operating profit (aka EBIT) right?
Thanks in advance. :)
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