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Financial Statement Analysis
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Re: Liabilities and Interest Expense
Correct.
however, we think you are still complicating matters with your distinguishing among "debt" "IBNS" and "debentures".
to further clarify your first point, for the most part, only leases play into the exceptions. obviously there might be company-specific factors...
Read More
My first question is why are IBNS's any different from other debt and debentures? If I issue a bond or note to raise $100k and use it to buy equipment, how is that different from going to a leasing company to finance the same $100 of equipment? (other than the first scenario produces a debenture that has claim on all the assets of the business in the event of default)
Do they not both equate to capital structure in the sense that they both financed PP&E for the company?
My second question is: assuming that we are only supposed to include IBNS's in the liabilities, does that mean the line item for interest expense on the Income Statement should only include interest relating to IBNS's?
If not, how do we resolve the difference between only having IBNS's on the BS and all interest on the income statement?
If so, please explain why? and where then would the other debt or debenture income and expense be posted on the income statement?
Thanks
Rick Read More