Inventory Affect On Three Statements?
Hey Guys,
Lets say Inventory increases by $10,000. What is the effect on the 3 statements?
At first I almost said that INV would have no effect on the I/S but I am not sure.
But now I think it is: (tax rate 40%)
I/S: COGS goes down 10,000 and NI goes up 6,000
As far as the C/S: I know NI would go up 6,000 but is there anything else that occurs in this section before getting to the B/S?
Conversely, I have heard conflicting things on the effect of COGS on the statements. Clarification is much needed and helpful. Assuming 10,000 increase as well.
Cash financed: Cash goes down 10k on C/F, Cash goes down 10k on B/S, Inv goes up 10k on B/S
Debt financed: Inv goes up 10k on B/S, A/P goes up 10k on B/S
b2, thanks man.
What about if we were talking about an increase in COGS by 10,000?
Appreciate your help.
Doubt that you'd get this scenario, but I'm thinking...
Assuming tax rate of 40%:
I/S: net income goes down by $6k C/F: cash goes down by $6k B/S: cash goes down by $6k, retained earnings goes down by $6k
Thanks man
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