Unlocking Hidden Debt

Traditional debt-to-equity ratios don't work for many companies because the largest single indebtedness -- operating leases -- is in many cases not on the balance sheet. This is most true of multi-unit operators like retailers and restaurant companies, but it can apply to virtually any company that uses operating leases heavily. Fortunately, a quick review of the annual report section on leases and a good rule of thumb can unlock the true leverage picture, often with surprising results.

Link