engleski

THE IMPACT OF ACCOUNTING TREATMENT OF OPERATING LEASING ON THE TRANSPARENCY OF FINANCIAL STATEMENTS

The present is characterized by various financial products with the main goal to improve business position within the modern market conditions. Due to its simplicity and flexibility, leasing provides efficient utilization of company’s resources by adapting to new market demands with simpler changing of equipment and operation funds, avoiding technological obsolescence of equipment, as well as the corresponding tax savings. The purpose of this paper is to investigate if there are statistically significant differences in specific financial ratios between companies who use operational leasing versus companies who use financial leasing. The research will try to determine if the chosen financial ratios of the companies who use operating leasing are superior to those of the companies who use financial leasing. Research will be conducted on companies listed on Zagreb Stock Exchange using discriminant analysis. Accounting treatment of operating leasing does not diminish the creditworthiness, since the operating leasing does not increase debt, unlike financial leasing or loans. Operating leasing allows off-balance sheet financing and overall liabilities throughout the operating leasing agreement are not recorded in the financial statement of leasing user. This accounting treatment of operating leasing has resulted in non-transparent financial statements ; therefore, it is considered as hidden debt. All the above indicates a need to change the accounting treatment of operating leasing with a goal to obtain an understandable picture of company assets and liabilities, resulting with transparent financial statements. Higher transparency of financial statements will contribute to better decision-making for not well educated investors since financial statements are the only source of information for them.

operating leasing, financial leasing, financial statements, hidden debt, financial ratios

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