how it wil effect the net income when a company borrows money



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Hi sir please explain as to how it wil effect the net income when a company borrows money for expansion as in the below case?


If a Telecom Company borrows Rs.5,000 Crores for expansion, this will negatively affect the Company's ?



Revenue


Gross Margin


Operating Income


Net Income

1 Answer(s)


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When a company borrows money, it has to pay interest expense. Interest expense is subtracted from revenue to arrive at net income and hence net income decreases due to interest when a company borrows money.