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Level 3

State of Cash Flows - Paying off a debt

If during the most-recent year the company paid off a debt that it had received in prior year - Will it adjust the net income in a positive or negative way?
I am referring to the Financing activities section of the Statement of Cash Flows

2 Comments
Level 12

Re: State of Cash Flows - Paying off a debt

Paying off debt has absolutely zero effect on net income as debt payment is not an expense. it will show as reduction of cash flow in the financing activities section only. Net income is the first line and is straight from P&L

Level 3

Re: State of Cash Flows - Paying off a debt

@john-pero
Thanks for the clarification, When I asked how it would affect, I was referring to the cash flow rather than the net income.

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