Liabilities and Off-Balance Sheet Financing
Liabilities and Off-Balance Sheet Financing – Examine your company’s use of leverage and compare its use of leverage with its competitors (FA Credit). Prepare a line chart that compares your company’s use of leverage over the most recent five years with its competitors. Make a judgment about your firm’s financial risk compared to its competition. Does your company utilize off-balance sheet financing? If so, estimate the value of this off-balance sheet financing and prepare a revised balance sheet recognizing this debt. Calculate the impact of this off-balance sheet debt on the leverage ratios and on your overall assessment of each firm’s financial risk. Do the firms have any pension obligations? Is any portion of these obligations unfunded? How has this obligation changed over the past five years?