标题: Effect of capitalizing an asset on financing cash flow?? [打印本页] 作者: jawz 时间: 2011-7-13 16:49 标题: Effect of capitalizing an asset on financing cash flow??
I understand that capitalizing vs. expensing an asset produces:
- higher CFO (because expensing outweighs the depreciation expense)
- higher net income (because of lower depreciation)
- lower CFI (because of higher investment cost in assets)
- higher assets
- higher equity
- higher ROE and ROA (because of higher net income)
But somewhere in my notes I wrote that capitalizing produces lower CFF as well ("because depreciation is a negative CFF"), which I now have trouble verifying. Is this a special case? In general, depreciation would be a negative CFO.
Any help appreciated.作者: RobertA 时间: 2011-7-13 16:49
has no impact on CFF my friend in this country, only CFO and CFI作者: Micholien 时间: 2011-7-13 16:49
- lower CFI (because of higher investment cost in assets)
- higher assets
I don't get this line.. could you expand?作者: Finalnub 时间: 2011-7-13 16:49
As far as I understood, capitalizing, for example of development of an asset, will result in higher intangible assets. As ending intangible assets is higher than beginning intangible assets, this would count as a negative CFI.作者: Flok 时间: 2011-7-13 16:50
Are you sure you're not thinking of a capitalize lease where the PV of the lease payments is a liability?
- Robert作者: suyash1989 时间: 2011-7-13 16:50
positive. this has nothing to do with finance or operating leases.作者: Ionutzakis 时间: 2011-7-13 16:50
It has no effect on CFF.
Anything capitalized will roll through CFI causing that to become lower over time. In the initial period, CFO will be higher than if you were to expense.
