How the issuance of stock could increase a company’s credit

Assignment Help Finance Basics

Reference no: EM131411140

In the late 1990s the Internet explosion sent the share values of well-known Internet companies soaring. Many of these companies took advantage of the high prices by making major share issuances and using the funds as their major source of financing. Lycos collected $111 million from a 1998 issuance; Yahoo! collected over $800 million over a three-year period; and America Online topped them all, collecting over $1 billion. While each company used the proceeds a little differently, they all used some of it to reduce debt, update equipment, and increase current assets.

REQUIRED:

a. Describe how the issuance of stock to reduce debt, update equipment, and increase current assets affects the fundamental accounting equation.

b. Explain how the issuance of stock could increase a company's credit rating.

Reference no: EM131411140

Questions Cloud

How the transaction affected campbell soup’s balance sheet : How did the transaction affect the accounting equation from Campbell Soup's perspective?

Influence of black power : Describe the black women civil rights by useing the influence of Black Power?

Interval that is certain to contain the actual proportion : What is the interval that is 95% certain to contain the actual proportion of people in this age group who have seen a ghost?

What was radical reconstruction : Choose one of the following questions to answer: 1. What was radical Reconstruction? Was it radical?

How the issuance of stock could increase a company’s credit : Describe how the issuance of stock to reduce debt, update equipment, and increase current assets affects the fundamental accounting equation.

Major witchcraft scares in the chesapeake colonies : 1. Explain why there were no major witchcraft scares in the Chesapeake colonies and no uprising like Bacon's Rebellion in New England. Consider the possible social, economic, and religious causes of both phenomena.

Analyze an ethical issue that a business has faced : You will identify and analyze an ethical issue that a business, corporation or profession has faced, or is currently confronting. You must first submit the proposed issue you intend to research for approval before proceeding.

Compare the tang empress wu zetian : Comparing Ancient Female Rulers. Compare the Tang Empress Wu Zetian (also known as Empress Wu or as Wu Zhao; ruled China around 690-705 AD) with either the Pharaoh Cleopatra (ruled Egypt around 51-31 BC) or the Pharaoh Hatshepsut (ruled Egypt arou..

Ireland became focused on protestant vs catholic : Why do you think the conflict In Ireland became focused on protestant vs catholic? and Do you think Ireland could have avoided the war of independence had Gladstone's home rule bills passed?

User Account

All Pages