What is off-balance-sheet financing?

Re: What is off-balance-sheet financing?

Off-balance-sheet financing is a form of financing in which large capital expenditures are kept off of a company's balance sheet through various classification methods. Companies will often use off-balance-sheet financing to keep their debt to equity (D/E) and leverage ratios low, especially if the inclusion of a large expenditure would break negative debt covenants.

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Re: What is off-balance-sheet financing?

An accounting technique in which a debt for which a company is obligated does not appear on the company's balance sheet as a liability.Operating leases are one of the most common forms of off-balance-sheet financing.Off balance sheet financing allows a company to borrow being without affecting calculations of measures of indebtedness such as gearing.

Re: What is off-balance-sheet financing?

This is where the assets can not be definitively assessed. The value is subjective, not aftermarket, and no assessment based on finance and banking models are respected. Funding for these positions kept off balance sheet. The result can make a company appear to have a better value than they have. Its part of why we had a tank market in 2007-2009 and failures of large banks.

Re: What is off-balance-sheet financing?

Off-balance sheet financing, by comparison, is any form of funding that avoids placing owners' equity, liabilities or assets on a firm's balance sheet. This is generally accomplished by placing those items on some other entity's balance sheet.

Re: What is off-balance-sheet financing?

A form of financing in which large capital expenditures are kept off of a company's balance sheet through various classification methods. Companies will often use off-balance-sheet financing to keep their debt to equity (D/E) and leverage ratios low, especially if the inclusion of a large expenditure would break negative debt covenants