1. How will Dropbox’s upcoming initial public offering of its stock impact its balance sheet?

2. Dropbox IPO to be in 2018 Dropbox started in 2007
Over 500 million registered users of Dropbox
When IPO occurs, its existing preferred stock will be converted into common stock
The balance sheet on next slide shows what Dropbox’s stockholders’ equity section would have looked like at December 31, 2017, if all of its preferred stock had already been converted to common stock

3. Pro forma

4. Question 1
When Dropbox issues these common stock shares through its IPO in exchange for cash, what impact will that stock issuance have on Dropbox’s assets, liabilities, and equity?

5. Question 2
What impact, if any, will the Dropbox IPO have on its current ratio? On its debt ratio?

6. Question 3
Why might Dropbox be choosing to issue stock rather than incur more debt to raise cash?

7. Question 4
Will this IPO have any direct impact on Dropbox’s income statement? Explain.

8. Question Recap
When Dropbox issues these common stock shares through its IPO in exchange for cash, what impact will that stock issuance have on Dropbox’s assets, liabilities, and equity?
What impact, if any, will the Dropbox IPO have on its current ratio? On its debt ratio?
Why might Dropbox be choosing to issue stock rather than incur more debt to raise cash?
Will this IPO have any direct impact on Dropbox’s income statement? Explain.

9. For additional news stories to use in the accounting classroom, see the Accounting in the Headlines blog at Questions or comments? Dr. Wendy Tietz at