S2000 - question re impact of stock options on CFO

Water Cooler
#1

S2000 - in the Investments forum, Palantir and I are discussing the impact of option grants and exercises on Amazon’s cash flows. I went back to CFA L2 FSA colume (reading 23 sections i and j in 2012 curriculum) but found no definitive answer.

To me it looks like options grant would increase CFO compared to NI since it’s a non-cash charge on the income statement. Options exercise would also increase some CF - maybe CFF since it is issuance of new shares. And options expense would reduce NI providing a tax benefit similar to the tax benefit provided by depreciation. Are any of these statements close to being right?

#2

https://www.youtube.com/watch?v=bXlDl7jD4aE&feature=youtu.be

Yo S2000, how does the magician do this trick?

#3

Tax deduction occurs on exercise of options and not for grant of options.

#4

Bump.

Don’t the companies expense options when they are granted? If they do, wouldn’t that decrease their net income and give them a tax benefit?

And what about cash flows - would exercise of options increase cash flow without affecting net income, or … ?