The Effect of The Recent IFRS 16 on Major Financial Statements’ Ratios

Abstract

Companies adopting the recent IFRS 16 would be required to capitalize all their previous "off-balancesheet" operating leases as finance leases. This dramatic shift is expected to have a significant effect on major financial statements' ratios which indicate the level of profitability, financial risk, and liquidity of the company. This review will look at the main financial statements' ratios, and at the expected effect that the switch from the superseded IAS 17 to IFRS 16 will have on them.