Summary of Financial Statement Effects of Capitalizing v/s Expensing - Level II FRA (Reading 21)

	Capitalizing	Expensing
Total Assets	Higher	Lower
Shareholder’s Equity	Higher	Lower
Income Variability	Lower	Higher
Net income (1st year)	Higher	Lower
Net income (subsequent years)	Lower	Higher
Operating Cash flow	Higher	Lower
Investing Cash flow	Lower	Higher
Debt ratio & Debt-to-Equity ratio	Lower	Higher
Interest Coverage (1st year)	Higher	Lower
Interest Coverage (subsequent years)	Lower	Higher