What is "Proceeds from issuance of long-term debt"?
I am analyzing a company for a project and saw that there balance sheet Cash and Equivalents jumped from $7289 to $39924 from 2018 to 2019 (in millions). I went to cash flow statement, and see that for 2019 there is $31,482 coming from Proceeds from issuance of long-term debt, bringing the cash flow from financing activities up to positive $18,708 in 2019 from -$14396. I checked the balance sheet again, and the long-term debt went up around $30,000 as well. So does this mean the company took on a loan? Is this a bad sign for the future? Or could it mean they need cash for research, etc.. ?
- JuanBLv 73 weeks ago
It is a loan. Cash borrowed. Because financial statements are mostly a picture of what is going on in a year, loans are listed as 1) current debt - what has to be paid this year and 2) long-term debt - what has to be paid next year and beyond.
Debt isn't bad, if used to improve the business. Example buy equipment that will generate revenues for the next 20 years. But if it is just because they needed to get a positive cash flow then it might be a problem. So you might want to look to see why financing activities was negative. Is the company losing money and borrowed because they are losing money???