Operating Lease Capitalization – Reasons and its Impact on Financial Ratios of WIG30 and sWIG80 Companies
Operating Lease Capitalization – Reasons and its Impact on Financial Ratios of WIG30 and sWIG80 Companies

Summary/Abstract: According to current accounting regulations leases are classified as finance lease or operating lease. Assets under operating leases are not recognized on balancesheet, hence they do not influence different financial ratios used to evaluate financial situation and performance of entities. In the literature there has been debate over theneed, methods and consequences of operating lease capitalization since many years.This issue seems to be more and more important nowadays, because due to changes ofaccounting regulations (publishing new standard – IFRS 16), from the beginning of 2019almost all leases will be treated as finance lease. This means that underlying assets (and corresponding liabilities) will be recognized on balance sheet, what may change financial situation (assessed on the basis of financial ratios) of many companies. The article is an attempt to assess potential impact of operating lease capitalization on chosen financial metrics and ratios of Polish companies. The study performed by the authors of this papercovers 20 companies of sWIG80 index and 11 companies of WIG30 index that disclosed information about operating lease in their consolidated financial statements for year2015. The result of the empirical study showed that capitalization of operating lease will have a moderate effect on financial ratios.

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