Off-Balance Sheet Financing
Content
Definition
Off-Balance Sheet Financing involves funding obtained through methods that do not require the company to include liabilities on its balance sheet.
Usage and Context
Frequently asked questions
- What is an off-balance sheet financing? Off-balance sheet financing is a method of obtaining funds that do not appear as liabilities on the company`s balance sheet.
- What is the difference between on-balance sheet and off-balance sheet? On-balance sheet financing includes liabilities on the company`s balance sheet, while off-balance sheet financing does not show these liabilities on the balance sheet.
- What is off-balance sheet financing transactions? Off-balance sheet financing transactions are financial activities, like leasing or partnerships, that do not appear as liabilities on the company`s balance sheet.
Benefits
Off-balance sheet financing helps companies secure funding without increasing their reported liabilities, improving financial ratios and balance sheet appearance.
Conclusion
Off-Balance Sheet Financing allows companies to obtain funding without showing liabilities on their balance sheet, providing financial flexibility and improved financial ratios.
