Spike in 2019Q1 Leverage Ratios: The Impact of Operating Leases
Posted: 7 May 2020
Date Written: December 13, 2019
In this note, we show that the key driver of the 2019:Q1 increase in the leverage ratio appears to be a change in accounting rules – which requires the inclusion of operating leases as financial liabilities on U.S. corporations' balance sheets – and also provide a methodology for adjusting the leverage ratio to allow for cleaner historical comparisons.
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