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Cash flow Reporting Practices for Interest Paid on Zero Coupon Bonds

Sponsored By Georgia Tech Financial Analysis Lab

Topics:
Accounting > Cash Flow
Banking & Capital Markets > Debt/Bonds

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Abstract:
This study examines the cash flow reporting practices of companies that repurchase or redeem zero coupon bonds. We also evaluate the impact these practices have on the reported cash flows from operating activities. Our results indicate that most companies classify the cash paid towards interest on zero coupon bonds as a financing use of cash. The mean reduction in reported operating cash flow that would be caused by inclusion of interest paid on zero coupon bonds averaged approximately 11%.
DETAILS
Sponsored by: Georgia Tech Financial Analysis Lab
Released: January 03, 2008
Length: 10 pages
Format: PDF (93 kb)
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