I'm an engineering phd trying to fathom my way into business and accounting, and was hoping to post questions here more frequently as I try to make my way through financial reports. For a layman I would consider myself quite savy at accounting, but there are many things I really don't understand nor have the background for, and my first is this:
The financial statement of the company I am reading about reports the following:
variable rate debt: $679,588,000
net settled derivatives
(interest rate swaps): $6,091,000
net variable rate liabilities: $685,679,000
given that the company engaged in interest rate swaps to reduce its variable rate liability (ie. it is the buyer of the derivatives as I understand it), shouldn't the interest rate swaps be DEDUCTED from the variable rate debt to yield the net variable rate liability, rather than being added to it?
does net variable rate liability not mean the amount of debt that is effectively at a variable rate (ie not being offset by the swaps)?
thanks in advance
The financial statement of the company I am reading about reports the following:
variable rate debt: $679,588,000
net settled derivatives
(interest rate swaps): $6,091,000
net variable rate liabilities: $685,679,000
given that the company engaged in interest rate swaps to reduce its variable rate liability (ie. it is the buyer of the derivatives as I understand it), shouldn't the interest rate swaps be DEDUCTED from the variable rate debt to yield the net variable rate liability, rather than being added to it?
does net variable rate liability not mean the amount of debt that is effectively at a variable rate (ie not being offset by the swaps)?
thanks in advance
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