Financial ratio and Operating lease: Difference between pages

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A fiancial ratio is one financial number divided by another.
An operating lease involves the lessee (user) paying rentals for the hire of an asset for a period of time which is normally substantially less than the asset’s full useful life.
 
For example, the ratio of a company's share price to its earnings, known as the price to earnings ratio.
The owner (lessor) retains the significant risks and rewards of ownership - usually including the responsibility for maintenance, insurance and the like, and enjoyment of a significant residual value of the asset at the end of the lease term.


Under IAS 17 and SSAP 21, operating leases are accounted for 'off balance sheet' by the user of the asset.
This means that the obligations/liabilities to pay future lease instalments are only disclosed in the notes to the financial statements, not on the face of the balance sheet.


== See also ==
== See also ==
* [[Debt to EBITDA ratio]]
* [[ED 2010/9]]
* [[Debt to equity ratio]]
* [[Finance lease]]
* [[Dividend yield]]
* [[IAS 17]]
* [[Earnings per share]]
* [[Lease]]
* [[Intensity]]
* [[SSAP 21]]
* [[Key performance indicator]]  (KPI)
* [[Price to earnings ratio]]
* [[Profit margin]]
* [[Profit per employee]]
* [[Ratio]]
* [[Ratio analysis]]


[[Category:Accounting,_tax_and_regulation]]
==External links==
[[Category:The_business_context]]
[http://www.treasurers.org/node/8011 Operating lease accounting changes] The Treasurer magazine July 2012;  www.treasurers.org
[[Category:Corporate_finance]]
[[Category:Investment]]
[[Category:Long_term_funding]]
[[Category:Manage_risks]]
[[Category:Financial_products_and_markets]]

Revision as of 15:09, 25 July 2013

An operating lease involves the lessee (user) paying rentals for the hire of an asset for a period of time which is normally substantially less than the asset’s full useful life.

The owner (lessor) retains the significant risks and rewards of ownership - usually including the responsibility for maintenance, insurance and the like, and enjoyment of a significant residual value of the asset at the end of the lease term.

Under IAS 17 and SSAP 21, operating leases are accounted for 'off balance sheet' by the user of the asset. This means that the obligations/liabilities to pay future lease instalments are only disclosed in the notes to the financial statements, not on the face of the balance sheet.

See also

External links

Operating lease accounting changes The Treasurer magazine July 2012; www.treasurers.org