FYI: Companies have been on a borrowing binge, but you wouldn't always know the full scale of their liabilities by looking at the balance sheet. This makes it hard for investors to compare businesses that fund their activities in different ways. Happily though, that's about to change.
How come? The answer is buried in the notes to financial statements (you know, the ones you don't bother reading). It's here that companies have parked about $3 trillion in operating lease obligations, according to Bloomberg data. For non-financial companies, those obligations equate to more than one quarter of their long-term (on-balance sheet) debt.
Regards,
Ted
https://www.bloomberg.com/gadfly/articles/2017-03-20/say-hello-to-3-trillion-in-forgotten-debt
Comments
On the corporate side of the debt boat:
Nothing wrong with borrowing to restructure old debt, but financial engineering seems to take center stage when company debt gets mentioned.
Borrowing money to buy back shares of company stock, which increases the share price of the remaining stock, which meets quarterly/yearly bonus goals (our stock went up....we must be doing something right), which in turn provides huge cash bonuses for CEOs with borrowed money... (remember borrowed money). Now this seems completely wrong and slightly criminal.