orang3eph

Flok Wrote:
-------------------------------------------------------
> Well, technically Equity has nothing to do with
> all these kinds of securities...
>
> Equity is simply Asset less Liablities, which is
> the basic FR rule. All kinds of securities are an
> asset on the balance sheet. So if you have more
> assets all else being equal you will have more
> equity. The connection is that any unrealized
> gains from HFT and AFS securities will bypass the
> income statement and come into the balance sheet
> as Other comprehensive income, which is a part of
> equity. So if you have an unrealized gain on HTS,
> that will increase equity.
>
> MS are mainly relevant when you are calculating
> balance sheet ratios, as it's a part of current
> assets. (so a part of all curren/quick/cash ratio)

Yes you are correct about AFS and other stuff but your understanding about HFT is not correct here. Unrealized gains and losses on HFT do go to income statements and NI is affected.