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Author : Kathryn Ann Her
Publisher :
ISBN 13 :
Total Pages : 42 pages
Book Rating : 4.:/5 (397 download)
Download or read book Operating Leases and the Effect of Capitalization on Risk and Performance Measures written by Kathryn Ann Her and published by . This book was released on 1997 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Charles W. Mulford
Publisher :
ISBN 13 :
Total Pages : 15 pages
Book Rating : 4.:/5 (129 download)
Download or read book The Effects of Lease Capitalization on Various Financial Measures written by Charles W. Mulford and published by . This book was released on 2015 with total page 15 pages. Available in PDF, EPUB and Kindle. Book excerpt: The FASB, in conjunction with the International Accounting Standards Board, is currently in the planning stages of a project that would revise SFAS 13, Accounting for Leases. What is proposed is that leases that are presently accounted for as operating leases, that is, those leases that do not meet the current requirements for on-balance-sheet treatment, would be accounted for as capital leases and brought onto the financial statements. For companies that use a significant amount of operating leases to finance operations, the financial statement impact could be far-reaching, including material effects on various measures of profitability, financial leverage, debt coverage and cash flow.In this article, we look at the retail industry, an industry that uses operating leases extensively, to evaluate how certain key measures of financial performance and position might be affected by the capitalization of operating leases. Among the findings are an increase in EBITDA, though reductions in income from continuing operations and earnings per share. Financial leverage is increased and debt coverage measures are reduced. Measures of profitability, such as return on assets and return on equity are reduced. Finally, we find an increase in operating cash flow and free cash flow.
Author : Cédric Planner
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (114 download)
Download or read book The Effect of Capitalizing Operating Leases on US-Based Retail Companies written by Cédric Planner and published by . This book was released on 2019 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: After ten years of developing a new accounting standard for leases, the FASB issued ASC 842 on February 25th, 2016 to improve transparency and comparability of financial statements across companies. The following paper investigates the effect of capitalizing operating leases onto the balance sheet of US-based retail companies. As a basis, the author will present and elaborate on the theoretical fundamentals of the newly established standard ASC 842 through various sources of literature in order to afterwards establish a comprehensive research design. As a result of the research design, an empirical analysis will be conducted using various financial information from Form 10-K documents of each company within the sample to examine the effect of capitalizing operating leases on key financial metrics. According to the results, the paper justifies that capitalizing operating leases onto the balance sheet of US-based retail companies has the potential to create more transparency and comparability, but it will take some time. Furthermore, the results show that the capitalization of operating leases onto the balance sheet has a significant impact on key financial metrics. This impact will manifest itself in the form of individual companies needing to re-negotiate their debt or remuneration contracts.
Author : Yan Shi Gibson
Publisher :
ISBN 13 :
Total Pages : 195 pages
Book Rating : 4.:/5 (128 download)
Download or read book The New Lease Accounting Standards (Topic 842) written by Yan Shi Gibson and published by . This book was released on 2021 with total page 195 pages. Available in PDF, EPUB and Kindle. Book excerpt: The accounting treatment for operating leases has attracted attention from both business and academic communities. The progression of the operating lease from short-term low-risk rental activity to an extensive financing vehicle to hide liabilities posed a challenge to the accounting profession. The new lease accounting standards were launched with a background full of controversies. This study provided evidential support for the material changes in reported financial data after implementing the new lease accounting standards. The hypotheses testings utilized the paired t-test and its non-parametric alternative, Wilcoxon, to investigate the significance of the year-over-year differences in financial performance metrics measuring firms’ asset efficiency, profitability, financial leverage, liquidity, and credit risk. The research results revealed significant changes in every category of financial performance. Firms with operating leases demonstrated more volatility in financial performance than firms not engaged in operating leases. Asset efficiency and profitability decreased while financial leverage increased. Other than expected higher assets and liabilities, most firms in the Standard & Poor’s (S&P) Industrial Sector ended up with higher equity and cash holding positions. The significance of the changes in financial ratio reflects the magnitude of the differences in reported financial data pre and post the implementation of the new lease accounting standards.
Author : Kenneth Scott Ball
Publisher :
ISBN 13 :
Total Pages : 64 pages
Book Rating : 4.:/5 (34 download)
Download or read book The Capitalization of Operating Leases and Its Effects on Financial Performance written by Kenneth Scott Ball and published by . This book was released on 1995 with total page 64 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Alan Goodacre
Publisher :
ISBN 13 :
Total Pages : 34 pages
Book Rating : 4.:/5 (129 download)
Download or read book The Potential Impact of Enforced Lease Capitalisation in the UK Retail Sector written by Alan Goodacre and published by . This book was released on 2001 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: The main objective of the paper is to assess the potential economic consequences of the G4+1 proposed changes to lease accounting by examining companies in the UK retail sector over the 1994-99 period. The magnitude of the impact of lease capitalisation is assessed by examining the effect on nine key accounting ratios that are used in decision-making and in financial contracts. A 'constructive capitalisation' procedure is used to estimate the unrecorded lease liability and asset.Operating lease finance is shown to be very important in the retail sector, with a long-term liability approximately 3.3 times higher than on-balance sheet long-term debt; by contrast, finance leases are immaterial. Operating leased assets, the major part of which is 'land and buildings' (98%), represent a significant proportion (28%) of reported total assets. Capitalisation of operating leases would have a major impact on all nine ratios. Further, the ranking of companies changes markedly for asset turnover, interest cover and the three capital-based gearing measures, and especially for general retailers.Using credit-risk adjusted discount rates would lessen slightly the impact of capitalisation, but would have little impact on intra-sector ranking of company performance. Anticipation of future lease rental increases would have a significant impact on the level of operating lease assets/liabilities and on profit after tax. While the use of renewable short lease contracts (or break clauses) would reduce the level of operating lease assets and liabilities, substantial amounts would remain to be reported on-balance sheet. These findings contribute to the assessment of the economic consequences of a policy change requiring operating lease capitalisation. Prior research suggests that individual users of financial statements are not efficient information processors, and also that company managers do not believe that users, even in aggregate (e.g. the stock market) are efficient processors. Consequently, the significant changes in the magnitude of key accounting ratios and the major shift in company performance rankings suggest that interested parties' economic decisions are likely to be affected.
Author : Katrina Avila Munichiello
Publisher : Tuttle Publishing
ISBN 13 : 9780804848992
Total Pages : 256 pages
Book Rating : 4.8/5 (489 download)
Download or read book A Tea Reader written by Katrina Avila Munichiello and published by Tuttle Publishing. This book was released on 2017-03-21 with total page 256 pages. Available in PDF, EPUB and Kindle. Book excerpt: A Tea Reader contains a selection of stories that cover the spectrum of life. This anthology shares the ways that tea has changed lives through personal, intimate stories. Read of deep family moments, conquered heartbreak, and peace found in the face of loss. A Tea Reader includes stories from all types of tea people: people brought up in the tea tradition, those newly discovering it, classic writings from long-ago tea lovers and those making tea a career. Together these tales create a new image of a tea drinker. They show that tea is not simply something you drink, but it also provides quiet moments for making important decisions, a catalyst for conversation, and the energy we sometimes need to operate in our lives. The stories found in A Tea Reader cover the spectrum of life, such as the development of new friendships, beginning new careers, taking dream journeys, and essentially sharing the deep moments of life with friends and families. Whether you are a tea lover or not, here you will discover stories that speak to you and inspire you. Sit down, grab a cup, and read on.
Author : Harry I. Wolk
Publisher : SAGE
ISBN 13 : 1412953456
Total Pages : 697 pages
Book Rating : 4.4/5 (129 download)
Download or read book Accounting Theory written by Harry I. Wolk and published by SAGE. This book was released on 2008 with total page 697 pages. Available in PDF, EPUB and Kindle. Book excerpt: Presents complex materials in a clear and understandable manner. Incorporating the latest accounting standards and presenting the most up-to-date accounting theory from the top academic journals in accounting and finance throughout the world.
Author :
Publisher : Lulu.com
ISBN 13 : 9291316695
Total Pages : 294 pages
Book Rating : 4.2/5 (913 download)
Download or read book International Convergence of Capital Measurement and Capital Standards written by and published by Lulu.com. This book was released on 2004 with total page 294 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Mehmet Huseyin Bilgin
Publisher : Springer
ISBN 13 : 3319541129
Total Pages : 450 pages
Book Rating : 4.3/5 (195 download)
Download or read book Regional Studies on Economic Growth, Financial Economics and Management written by Mehmet Huseyin Bilgin and published by Springer. This book was released on 2017-04-13 with total page 450 pages. Available in PDF, EPUB and Kindle. Book excerpt: This volume presents selected papers from the 19th Eurasia Business and Economics Society (EBES) Conference held in Istanbul. Its primary emphasis is on showcasing the latest empirical research on social change, sustainable development and the management of public and private organizations in emerging economies. The respective articles also address more specialized and related topics such as financial risk tolerance, international strategic partnerships, female labor force participation, human capital dynamics, and economic integration, among others.
Author : Stephen A. Zeff
Publisher : McGraw-Hill Companies
ISBN 13 :
Total Pages : 812 pages
Book Rating : 4.E/5 ( download)
Download or read book Readings and Notes on Financial Accounting written by Stephen A. Zeff and published by McGraw-Hill Companies. This book was released on 1994 with total page 812 pages. Available in PDF, EPUB and Kindle. Book excerpt: This collection of notes and readings on Financial accounting is best used as a core text in the theory course or as a supplement to an Intermediate course or an Advanced accounting course. The goal of this book is to provide insight into concepts, issues, and controversies which underlie accounting standards and practices.
Author : Clayton Ralph Sager
Publisher :
ISBN 13 :
Total Pages : 254 pages
Book Rating : 4.:/5 (122 download)
Download or read book Market Based Risk Measures and the Economic Effect of Capital Leases written by Clayton Ralph Sager and published by . This book was released on 1981 with total page 254 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Jennifer Lynne M. Altamuro
Publisher :
ISBN 13 :
Total Pages : 45 pages
Book Rating : 4.:/5 (129 download)
Download or read book Operating Leases and Credit Assessments written by Jennifer Lynne M. Altamuro and published by . This book was released on 2012 with total page 45 pages. Available in PDF, EPUB and Kindle. Book excerpt: Operating leases have grown significantly as a source of corporate financing over the last 30 years. Their off-balance sheet treatment, which may in part explain their popularity, raises concern that financial risk may be misjudged and capital misallocated. Prior research evidence on the above issue is mixed. To improve reporting transparency, regulators propose a new accounting concept, right of use, which will add the present value of most leases to the balance sheet. We examine the effect of operating leases on loan pricing by banks, a sophisticated financial statement user. Since leases are a potential debt substitute, we expect them to be important in our setting. With loan spreads as the dependent variable, we test the differential explanatory power and model fit of as-reported financial ratios versus financial ratios adjusted for the capitalization of operating leases. We find that lease-adjusted financial ratios better explain loan spreads, especially for larger lenders. Our results also suggest that retailer leases that are closer in substance to rental agreements than financed asset purchases are less relevant for credit risk assessments. Thus we conclude that banks not only price operating leases, on average, but also make distinctions about which leases should be priced. Second, we explore the role of credit rating agencies and confirm that credit ratings also reflect capitalized operating leases, and find support for an informational role for others' credit assessments. However, unlike banks, rating agencies appear to capitalize all operating leases mechanically. Overall, our results suggest that banks and rating agencies adjust for the off-balance sheet presentation of operating leases and, at least in the case of banks, attempt to do so to reflect the underlying economics of the leases. This evidence lessens concern over the potential negative consequences of existing operating lease accounting and raises concern over proposed accounting that capitalizes all leases regardless of their economic characteristics.
Author : P. Natarajan
Publisher :
ISBN 13 :
Total Pages : 11 pages
Book Rating : 4.:/5 (13 download)
Download or read book Accounting Operating Lease- A Constructive Capitalisation Strategy written by P. Natarajan and published by . This book was released on 2019 with total page 11 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper intends to evaluate the effect of constructive capitalization of operating leases. The operating leases have to be treated appropriately so that the investors who use the financial ratios are enlightened adequately. The comparative model is used to look into the extent of the changes in the financial ratios of selected companies once the operating lease is capitalized. T-test and Wilcoxon test are applied on the basis of the normality of data. Similar studies have been conducted in many developed economies like USA, UK, New Zealand, etc. From the study, it was found that some financial ratios have significant changes, a finding that goes in tune with the hypothesis of the study. Being an emerging economy, in India, the area has not been discussed much. Moreover, the capitalization of operating lease is to be implemented by 1st April 1019 in Ind AS as a part of the latest convergence policy.
Author :
Publisher :
ISBN 13 :
Total Pages : 260 pages
Book Rating : 4.0/5 ( download)
Download or read book Accounting written by and published by . This book was released on 1998 with total page 260 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Elisa Raoli
Publisher : Springer Nature
ISBN 13 : 3030716333
Total Pages : 130 pages
Book Rating : 4.0/5 (37 download)
Download or read book IFRS 16 and Corporate Financial Performance in Italy written by Elisa Raoli and published by Springer Nature. This book was released on 2021-04-27 with total page 130 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book presents an empirical analysis on how the new lease accounting model of IFRS 16 affects financial statements and performance of Italian companies. It discusses the theoretical framework of the off-balance sheet financing with a particular focus on the off-balance sheet lease contracts. Previous research provided controversial results about the potential impacts on the companies’ financial statement and performance deriving from leases capitalization. The application of different methodological approaches based on estimation of the expected effects resulted in inconclusive results. This book aims to measure the real impacts deriving from the post-implementation of the new lease accounting standard (IFRS 16) on companies’ financial statements, economic and financial performance, on market reactions and on financial statement’ users.
Author : Anastasia Kraft
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (13 download)
Download or read book IASB Changes on Leasing - A Study Discovering the Impact of Lease Disclosures in the Assessment of Equity Risk written by Anastasia Kraft and published by . This book was released on 2013 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We investigate the relationship between equity risk and operating risk as well as equity risk and financial risk by analysing different levels of leverage, reported debt and earnings volatility of German listed companies. The results suggest that the measurement of equity risk is based on the variability in ROA. For firms that already have higher operating risk, investors include operating leases in the measurement of equity risk in addition to operating risk and reported financial risk. For firms with lower variability in ROA, the assessment of equity risk relates only to reported financial risk and operating risk; in addition, off-balance sheet debt is not significant in explaining variations in stock returns. Since reported debt and off-balance sheet debt are not treated equally, a mandated recognition of all lease contracts is expected to enhance the assessment of equity risk for firms with lower variability in earnings.
