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.
No tags available
When I started in the leasing business in 1974 I didn’t even know how to spell ITC, lease payments were determined by looking them up in a book of financial tables and we used SOMD (sum of the months’ digits)... read more
Even the most careful equipment leasing and finance company eventually enters into a transaction with a lessee/borrower that turns out to be an unethical deadbeat that not only refuses to honor its obligations but also seeks to continue to use... read more