What happens to the average assets calculation if bond issues occur?

When bond issues occur, the total assets of a company generally increase, which directly impacts the calculation of average assets. Bonds are a form of financing that provides the company with cash inflow, which adds to its assets. As a result, when calculating average assets, the new bonds issued increase the total asset base for the period in which they are issued.

For example, if a company issues bonds and receives cash, this not only increases the cash and cash equivalents within current assets but also adds to the liabilities, affecting the overall balance sheet. Since average assets are typically calculated over a period (e.g., beginning assets plus ending assets divided by two), the inclusion of the bond proceeds raises the total asset amount, thereby increasing the average.

It is important to consider that while liabilities also increase with bond issuance, the primary focus in this calculation is on the asset side of the balance sheet. Hence, since assets have increased due to the cash received from bond issuance, the average assets will reflect that increase.