What are the advantages and disadvantages to off-balance-sheet reporting?
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What do you think are the advantages and disadvantages to off-balance-sheet reporting?
Explain if you would recommend this practice to your company.
Explain when you might recommend this practice.
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Solution Summary
This solution discusses off-balance-sheet reporting in 389 words.
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What do you think are the advantages and disadvantages to off-balance-sheet reporting?
Explain if you would recommend this practice to your company.
Explain when you might recommend this practice.
Solution:
The main reason that companies use off-balance sheet reporting is to keep liabilities off of their balance sheets, and out of their income statements. When investors see high liabilities, or financial ratios based on the balance sheet data that include an excess of liabilities, investors start to question as to if their money is safe. Creditors also look at a company's balance sheet and related ratios, based on the amount of liabilities the company ...
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