Off–balance sheet financing
Off–balance sheet financing is a financing technique in which a firm uses partnerships and other arrangements to (in effect) borrow money while not reporting the liability on its balance sheet. For example, for many years neither leased assets nor the liabilities under lease contracts appeared on the lessees' balance sheets. To correct this problem, the Financial Accounting Standards Board issued FASB Statement 13.
Definitions
According to Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition),
- Off–balance sheet financing. A financing technique in which a firm uses partnerships and other arrangements to (in effect) borrow money while not reporting the liability on its balance sheet. For example, for many years neither leased assets nor the liabilities under lease contracts appeared on the lessees' balance sheets. To correct this problem, the Financial Accounting Standards Board issued FASB Statement 13.
Related concepts
- Financial management. A combination of enterprise efforts undertaken in order to procure and utilize monetary resources of the enterprise.
