Question:

How does Inventory increasing by $10 affect the three financial statements?

Answer hidden.

Answer:

We'll assume that the Inventory was purchased with Cash.

Income Statement: No changes to the Income Statement.

Cash Flow Statement: Because inventory is an asset, we know that it decreases Cash Flow from Operations by $10. Net change in Cash at the bottom of the CFS also decreases by $10.

Balance Sheet: On the Assets side, Inventory increases by $10 but Cash decreases by $10, so they cancel each other out. No change to Liabilities and Shareholder's Equity and the Balance Sheet balances.

Other

Accounting

Accounting

What happens to the three financial statements if we use PIK interest?

Accounting

How does $10 of Depreciation affect the three financial statements?

Accounting

Walk me through the three financial statements

Accounting

Why isn't the Income Statement affected by changes in Inventory?

Accounting

What is Goodwill Impairment?

Accounting

If depreciation is a non-cash expense, why does it affect the cash balance on the Cash Flow Statement?

Accounting

How is goodwill calculated?

Accounting

What flows into Retained Earnings?

Accounting

What's the difference between capital leases and operating leases?

Accounting

What are some ways that companies can manipulate their earnings?

Accounting

What is goodwill?

Accounting

What are deferred tax assets and liabilities?

Accounting

What is gross profit?

Accounting

Walk me through how $10 of Depreciation affects the three financial statements

Accounting

How do the 3 financial statements tie together?

Accounting

How does a company decide when to capitalize or expense a purchase?

Accounting

What is Operating Margin?

Accounting

A company makes a $100 cash purchase of equipment on Dec. 31. How does this impact the three statements this year and next year?

Accounting

What does it mean if a company has negative Working Capital?

Accounting

What are some of the major line items on the Cash Flow Statement?

Accounting

Where can you find Depreciation on the Income Statement?

Accounting

What is the difference between goodwill and intangible assets?

Accounting

How do you calculate Free Cash Flow?

Accounting

What are some of the major line items on the Balance Sheet?

Accounting

What is the relationship between CapEx and Depreciation?

Accounting

What are some examples of non-recurring charges that would be added back to a company's EBITDA?

Accounting

How do you calculate LTM (last twelve months) financials?

Accounting

What is amortization?

Accounting

What are some of the major line items on the Income Statement?

Accounting

Does Goodwill get amortized?

Accounting

What is the difference between deferred revenue and accounts receivable?

Accounting

What is gross margin?

Accounting

What is working capital?

Accounting

Is it possible to have negative Shareholder's Equity? If so, how?