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OFF-BALANCE-SHEET FINANCING
Off-balance-sheet financing refers to the nonrecording of certain financing
obligations.
Off-Balance-Sheet Examples
1) Through-put agreements; where a company agrees to run a specified amount
of goods through a processing facility.
2) Take-or-pay arrangements; where a company guarantees to pay for a
specified quantity of goods whether needed or not.
3) Product financing arrangements; where a company sells and agrees either to
repurchase inventory at a price equal to the original selling price plus
carrying and related costs or to guarantee a selling price to third parties.
Special Purpose Entities (SPEs)
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Retained Earnings
Retained earnings are the earned capital of a company that reflects the
accumulation of undistributed earnings or losses of a company since its inception.
or
Minority Interest
Minority interest is not an immediate claim on company resources. Instead,
minority interest represents the proportionate stake of minority shareholders
in a companys majority-owned subsidiary that is consolidated.