Operating Leases and EBITDAR
With the recent accounting changes to lease liabilities, my understanding is that for Operating Leases, rental expense for them still pops up in OpEx on the IS, but now on the BS, you list a Right-of-Use asset and the corresponding Operating Lease Liability. Is this right?
Now, if we added Op. Leases from Equity Value to TEV, wouldn't we have to use EBITDAR instead of EBITDA for the multiple? Seen some people use EBITDA without rental expense add-back even though the expense was broken out on the 10-Qs and 10-Ks, and unsure why. If a firm doesn't break out rental expense, should you then not add Operating Leases when moving from Equity Value to TEV since you subtracted rental expense by the time you got to EBITDA?
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I haven't followed too closely on that one, but with the recent changes to lease accounting, I believe the opex is shifted to interest and depreciation (for the operating lease liability and the right-of-use asset respectively).
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