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BVG Corporation issued convertible bonds as part of its capital structure. Clearly explain how a conversion...
BVG Corporation issued convertible bonds as part of its capital structure. Clearly explain how a conversion of a face value of $1,000,000 convertible bond for $1,000,000 million common shares affect: 9.1 Cash flow statement.
9.2 Cash flow performance ratio. Support your answers with two ratios from cash flow performance group.
9.3 Cash flow coverage ratio. Support your answers with two ratios from cash flow coverage group.
Solutions
Expert Solution
Answer:
Cash flow statement report the transactions which involve cash flow.It summarize the amount of cash and cash equivalent entering and leaving the company.It shows movement of cash affecting cash and cash equivalent balance.Conversion of bonds into common shares does not involve cash flow and accordingly not reported in cash flow statement.
Consequently,conversion of convertible bond into common shares does not have any impact on cash flow statement.
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