Question:

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

Answer hidden.

Answer:

Working capital changes do not appear on the Income Statement.

For Inventory, the expense is only recorded when the goods are sold. It doesn't count as Cost of Goods Sold or Operating Expense if it is sitting in a warehouse - only when the company sells it.

Other

Accounting

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How do the 3 financial statements tie together?

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What flows into Retained Earnings?

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What is gross margin?

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

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What are some ways that companies can manipulate their earnings?

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

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What is Goodwill Impairment?

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What is goodwill?

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Where can you find Depreciation on the Income Statement?

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

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

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What is amortization?

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Does Goodwill get amortized?

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

Accounting

What is the difference between deferred revenue and accounts receivable?

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

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

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What is gross profit?

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

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What is working capital?

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What is the relationship between CapEx and Depreciation?

Accounting

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

Accounting

How do you calculate Free Cash Flow?

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

Accounting

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

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Walk me through the three financial statements

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How is goodwill calculated?

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

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

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

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What are deferred tax assets and liabilities?

Accounting

What is the difference between goodwill and intangible assets?

Accounting

What is Operating Margin?

Accounting

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