All other things the same, if the company purchases equipment on credit, this transaction would have no impact on the company's book value per share.

Question

Quizplus · Accepted Answer

Purchasing equipment on credit does not affect the company's book value per share, as book value per share is calculated by subtracting total liabilities from total assets and then dividing by the number of outstanding shares. The equipment purchased would increase the total assets, but the corresponding increase in liabilities (due to the credit purchase) would cancel out the effect on book value per share.

All Other Things the Same, If the Company Purchases Equipment