Spike in 2019Q1 Leverage Ratios: The Impact of Operating Leases

Posted: 7 May 2020

See all articles by Berardino Palazzo

Berardino Palazzo

Federal Reserve Board

Jie Yang

Board of Governors of the Federal Reserve System

Date Written: December 13, 2019

Abstract

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.

Suggested Citation

Palazzo, Berardino and Yang, Jie, Spike in 2019Q1 Leverage Ratios: The Impact of Operating Leases (December 13, 2019). FEDS Notes No. 2019-12-13-2 https://doi.org/10.17016/2380-7172.2464, Available at SSRN: https://ssrn.com/abstract=3595653

Berardino Palazzo (Contact Author)

Federal Reserve Board ( email )

1801 K street NW
Washington, DC 20036
United States

Jie Yang

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

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