Operating leases as debt?
Are operating leases on the balance sheet (for lessee) generally considered debt when calculating net interest bearing debt for a U.S. company?
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Under gaap no under IFRS yes
If doing this analysis from a credit ratings you need to include leases.
If you want a true picture of a company's financial operations and the leases are a long term/permanent part of their capital structure you should include the cost of leases into its cost of capital.
Operating leases don't show up on the balance sheet...... that's capital lease
Thats not true in gaap anymore. You now capitalize both operating and finance leases onto the balance sheet. Check ASU 2016-02
Also, the point ill add that I don't think has been made yet is that when you capitalize operating leases, you need to be careful because rent expense is included in ebitda, so you calculate leverage stats off of ebitdar instead.
When spreading a company I’ve seen groups both include and exclude it. In practice, it ends up as a personal preference of the particular groups.
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