Off Balance Sheet Financing
This exercise, in essence, evolves around a re-working of the
debt position of a corporation from being recorded on balance
sheet to one which at best, is reflected by way of a contingent
liability with corresponding disclosure in the notes to the accounts.
Usage of derivatives and special purpose companies are inter
alia, devices that can be applied in shifting liabilities into
those classified as contingent liabilities. Receivables financing
is one of the many instances where the financing of a corporation
can be structured off balance sheet.
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