CFO: Lease Accounting Changes May Worsen Ratios
CFO magazine reported in a recent post that bankers are warning that altering lease accounting could significantly change a borrower’s balance-sheet profile, possibly making it look more leveraged than it actually is.
The changes could also worsen the financial ratios that govern a loan’s covenants, to the point where the borrower is in violation of its agreement with the bank, CFO said.
CFO noted that whatever changes the boards do make, however, one thing is nearly certain: the assets and liabilities of what are now operating leases will henceforth be recorded on corporate balance sheets.
To read the CFO.com news post click here.