When a corporation issues common stock what is the impact on the financial statements (assets, liabilities, stockholders' equity, and net income) and on the following financial ratios: Current ratio, ROA, and ROE?

bee_vn

When a corporation issues common stock what is the impact on the financial statements (assets, liabilities, stockholders' equity, and net income) and on the following financial ratios: Current ratio, ROA, and ROE?

SBU

Without giving you the answer outright just think about where common stock is found on the financial statements. It is only going to be shown on two financial statements, Balance Sheet and Cashflow Statements. Based on your question, only one of these two statements is necessary for the answer and it happens to be the one that includes what you listed: assets, liabilities, stockholders equity, net income.

Once you have determined which of the two statements to use you need to think about where the listed items fall within that sheet. Once you see where the items are in the statement you will be able to analyze the impact issuing common stock has on the financial statement.

HINT: In case you weren't aware of this, Common Stock is found under Stockholders Equity.

For the ratios just look at the equations, if any of them include stockholders equity or cash, than they are effected.