Effect of equity and debt finance on the Balance Sheet Flashcards
1
Q
What effect will equity have on the balance sheet?
A
Both the net asset value of the company will change AND the total equity (i.e. both halves of the balance sheet will be affected by the finance).
2
Q
What effect will debt have on the balance sheet?
A
The net asset value of the company will not change as a result of the loan and the equity will not change.
Only the top half of the balance sheet will be affected by the finance.
