Any form of financing, such as an Operating lease, that, for financial reporting purposes, is not required to be reported on the firm's balance sheet.
Financing that does not figure on the balance sheet of the firm. Lease agreements, which are not capitalised, are a type of off-balance sheet financing.
A lease that qualifies as a True Lease for the lessee's financial accounting purposes. Such leases are referred to as off-balance sheet financing due to their exclusion from the balance sheet asset and debt presentation, except for that portion of the payments that is due in the current fiscal period. Full disclosure of such transactions is typically made in the auditor's notes to the financial statements. Periodic payments are recorded as expense items on the lessee's income statement.1
Unlike the traditional methods of financing, operating lease obligations are not capitalized, thus improving balance sheet ratios. Leases are generally footnoted.
Financing that does not add debt to a company's balance sheet. Since the lessee does not own the equipment, nor does the lease structure suggest ownership, the lessee is not required to enter the corresponding long-term liability.
Financing that does not appear on a firm's balance sheet.
Financing that does not add debt to a company's balance sheet. This can be extremely important to companies with bank and/or other lender-imposed key operating ratio requirements. Under a true lease for example, the lessee does not show the leased equipment as an asset (the lessee does not own the equipment, nor does the lease structure contemplate ownership), nor therefore, is the lessee required report the corresponding long term liability. See the " True Lease" definition in this section or the " Lease Types page for additional related discussions.
Financing that does not add debt to a company's balance sheet under liabilities. Under a true lease, the lessee does not show the leased equipment as an asset (the lessee doesn't own the equipment, nor does the lease structure imply transfer of ownership), nor is the lessee required to report the liability.
A financial structure in which an asset and its associated debt are not required to be reported on the balance sheet (i.e. an operating lease).
The process whereby a contingent (dependent on certain events) liability is not recorded as a liability on the balance sheet but typically appears in the notes to the financial statement. Off-balance sheet financing is therefore not reflected in the balance sheet total, although possible related reserves will.
A method of financing assets so that, for accounting purposes, the assets do not appear on the balance sheet of the company using the assets.