This paper analyses the potential impacts of the introduction of a new accounting standard, International Financial Reporting Standard 16 (IFRS 16) – Leases, on financial leverage and performance of entities. This new accounting standard was introduced on 13 January 2016, and will become effective on 1 January 2019; it will have material impacts on the financial statements of listed companies adopting IFRS and change the basic principles of the current accounting system. Our aim is to estimate the impacts of the application of IFRS 16 on listed issuers of financial statements and the different impacts that the new standard could have in different activity sectors. This research estimates the effects of IFRS 16 on the ratios of debt/total assets, EBITDA/revenues and debt/equity. The conclusions summarize the effects on entity performance and net financial position. The research shows that in the financial statements of the lessee, there will be important changes. In particular, in the balance sheet, there will be an increase in lease assets, an increase in financial liabilities and a decrease in equity, while in the income statement, there will be an increase in EBITDA and an increase in finance costs. The impact of the application of IFRS 16 will be different depending on the use of operating lease contracts among the different business sectors. Leases are an important and flexible source of financing; listed companies, using IFRS and U.S. GAAP, are estimated to have around US$ 3.3 trillion in lease commitments. Finally, this study aims to analyse the possible impacts of communication of entities, focusing on alternative performance measures.

Magli, F., Nobolo, A., Ogliari, M. (2018). The Effects on Financial Leverage and Performance: The IFRS 16. INTERNATIONAL BUSINESS RESEARCH, 11(8), 76-89 [10.5539/ibr.v11n8p76].

The Effects on Financial Leverage and Performance: The IFRS 16

Magli, F
Primo
;
Nobolo, A
Secondo
;
Ogliari, M
Ultimo
2018

Abstract

This paper analyses the potential impacts of the introduction of a new accounting standard, International Financial Reporting Standard 16 (IFRS 16) – Leases, on financial leverage and performance of entities. This new accounting standard was introduced on 13 January 2016, and will become effective on 1 January 2019; it will have material impacts on the financial statements of listed companies adopting IFRS and change the basic principles of the current accounting system. Our aim is to estimate the impacts of the application of IFRS 16 on listed issuers of financial statements and the different impacts that the new standard could have in different activity sectors. This research estimates the effects of IFRS 16 on the ratios of debt/total assets, EBITDA/revenues and debt/equity. The conclusions summarize the effects on entity performance and net financial position. The research shows that in the financial statements of the lessee, there will be important changes. In particular, in the balance sheet, there will be an increase in lease assets, an increase in financial liabilities and a decrease in equity, while in the income statement, there will be an increase in EBITDA and an increase in finance costs. The impact of the application of IFRS 16 will be different depending on the use of operating lease contracts among the different business sectors. Leases are an important and flexible source of financing; listed companies, using IFRS and U.S. GAAP, are estimated to have around US$ 3.3 trillion in lease commitments. Finally, this study aims to analyse the possible impacts of communication of entities, focusing on alternative performance measures.
Articolo in rivista - Articolo scientifico
alternative performance measures, IFRS 16, financial leverage, lease, non-GAAP measures, performance
English
19-lug-2018
2018
11
8
76
89
open
Magli, F., Nobolo, A., Ogliari, M. (2018). The Effects on Financial Leverage and Performance: The IFRS 16. INTERNATIONAL BUSINESS RESEARCH, 11(8), 76-89 [10.5539/ibr.v11n8p76].
File in questo prodotto:
File Dimensione Formato  
IBR The Effects on Financial Leverage and Performance_The IFRS 16.pdf

accesso aperto

Tipologia di allegato: Publisher’s Version (Version of Record, VoR)
Dimensione 553.76 kB
Formato Adobe PDF
553.76 kB Adobe PDF Visualizza/Apri

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10281/201861
Citazioni
  • Scopus ND
  • ???jsp.display-item.citation.isi??? ND
Social impact