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Technology Stocks : Cisco Systems, Inc. (CSCO) -- Ignore unavailable to you. Want to Upgrade?

To: hueyone who wrote (62834)	1/31/2003 8:48:19 AM
From: RetiredNow	Respond to of 77400

Hueyone, my assumption is that rkral was asking the following: "What happens to operating cash flows, net income and retained earnings if we expense stock options?" That's a pretty clear cut case, if that's the question. Think about salary expense from cash compensation. Net income is reduced, but then you get a tax shield also, but the tax shield is smaller than the reduction in the first place. That means operating cash flow is reduced, because net income is your first input into operating cash flows. Then that also means retained earnings is reduced, because R/E is more or less a cumulative net income number. Maybe I don't have the question right, but if I do, then my answer is dead accurate.