Definition
Off-balance-sheet items include operating leases (historically), special purpose vehicles, and certain guarantees. They can obscure true leverage and risk. Accounting rule changes (ASC 842) brought most leases on-balance-sheet. Analysts review footnotes for hidden obligations.
Example
Before lease accounting changes, a retailer with $500M in operating leases had understated liabilities. New rules require capitalizing these leases, increasing reported debt.
FAQ
What is Off-Balance-Sheet Items?
Assets, liabilities, or financing not recorded on the balance sheet.
Why is Off-Balance-Sheet Items important?
Off-Balance-Sheet Items helps investors evaluate financial statements and make more informed decisions.