Intermediate Accounting, Thirteenth Edition

Chapter 14. LONG-TERM LIABILITIES

LEARNING OBJECTIVES

After studying this chapter, you should be able to:

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Your Debt Is Killing My Stock

Traditionally, investors in the stock and bond markets operate in their own separate worlds. However, in recent volatile markets, even quiet murmurs in the bond market have been amplified into movements (usually negative) in stock prices. At one extreme, these gyrations heralded the demise of a company well before the investors could sniff out the problem.

The swift decline of Enron in late 2001 provided the ultimate lesson: A company with no credit is no company at all. As one analyst remarked, "You can no longer have an opinion on a company's stock without having ...