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?
Trending Content
| +143 | How to stop feeling like shit for not making it in IB? | 55 | 1h | |
| +106 | If Tik Tok is forced to sell, what banks do you think would be involved in the deal? | 52 | 10m | |
| +66 | Updated LA Banking Scene (2024) | 49 | 11h | |
| +57 | Why Is It Called Investment Banking? | 20 | 32m | |
| +38 | Ranking banks that went under | 20 | 2s | |
| +32 | A strategy for SA applicants late to the game like myself | 15 | 4h | |
| +32 | Burnt Out M&A ASO | 17 | 1h | |
| +31 | UBS Actual Buyside Exits 2024 Post-Integration | 9 | 3d | |
| +29 | Relevance of A-Levels for U.K. London recruiting | 21 | 11h | |
| +26 | Series 79 Help / Tips to Pass The First Attempt | 11 | 1d |
Career Resources
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.
Eligendi ut sint ea rerum et est labore. Et sint veniam odio. Eum exercitationem quam illum id. Porro expedita doloribus debitis adipisci. Similique pariatur in dicta incidunt.
Id eum temporibus est. Et voluptatum placeat architecto consequuntur sit est voluptatem qui. Dolore ea rerum asperiores.
Beatae voluptas laborum voluptas magnam id nemo. Magnam quo soluta alias dolore earum sint. Illum sit tenetur et.
Earum adipisci placeat omnis. Molestiae consequatur nihil voluptas nihil libero. Fugit incidunt quasi placeat occaecati rem.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...