How Do Convertible Bonds Affect a Balance Sheet?
A balance sheet is a financial document that corporations share with investors to help them value the company. The balance sheet lists the corporation’s assets, liabilities and shareholders’ equity. A bond is a type of “liability,” and one type of bond is a convertible bond, which the bondholder can convert to stock at any time. However, a stock is considered “shareholders’ equity,” so this bond conversion can affect the balance sheet.
