How do expense affect equities

CFA Level I FRA
#1

Hi,

Can some one please explain how does expense impact in decrease of equities

#2

Through net income.

#3

Higher Expense → lower operating income → lower net income → lower Retained Earnings/Equity on balance sheet

#4

Thanks Marlowe and S2000magician :slightly_smiling_face:

#5

My pleasure.

#6

Also my pleasure, although I should note that I didn’t see S2000’s response before I wrote my response. That’s like playing pickup basketball and looking off passes to jack up a 3, when you happen to have Steph Curry on your team. :wink:

#7

more expenses leads to less profit
less profit leads to less retained earings
less retained earnigs leads to decrease in equities
i guess :crossed_fingers: