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EBFinancials
January 11, 2019

State of Cash Flows - Paying off a debt

  • January 11, 2019
  • 1 reply
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If during the most-recent year the company paid off a debt that it had received in prior year - Will it adjust the net income in a positive or negative way?
I am referring to the Financing activities section of the Statement of Cash Flows

    1 reply

    john-pero
    john-pero
    January 11, 2019

    Paying off debt has absolutely zero effect on net income as debt payment is not an expense. it will show as reduction of cash flow in the financing activities section only. Net income is the first line and is straight from P&L

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    EBFinancialsAuthor
    January 11, 2019

    @john-pero
    Thanks for the clarification, When I asked how it would affect, I was referring to the cash flow rather than the net income.

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