Converting Operating Lease Expenses
Originally published: 20/06/2016 17:29
Publication number: ELQ-27675-1
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Converting Operating Lease Expenses

Convert operating lease expenses into financing expenses and restates operating income and debt outstanding

Operating lease expenses are really financial expenses, and should be treated as such. Accounting standards allow them to be treated as operating expenses. This program will convert commitments to make operating leases into debt and adjust the operating income accordingly, by adding back the imputed interest expense on this debt.

Note: this model is being shared with the authorization of Professor Aswath Damodaran from NYU Stern Business School (

This Best Practice includes
1 Excel Model File, 1 ReadMe

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Further information

The objective of this model is to get the following output values:
- Debt Value of Leases
- Operating Income with operating leases reclassified as debt
- Debt with operating leases reclassified as debt
- Adjusted Operating Income

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