Lease adjusted leverage (Pre-IFRS 16)
Hi,
Can somebody please clarify the methodology of how operating leases were capitalised prior to the introduction of IFRS 16? (for the purposes of calculating rent-adjusted leverage)
I have read that a rule of thumb was 8.0x rent expense added onto net debt / EBITDAR. Whilst I understand it differs by industry, is anyone able to provide colour on how that multiple is determined? (I.e. is it based on weighted average lease term remaining?)
Thanks in advance.
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