Logic and Criteria for Assessing Financial Stability of a Leasing Company

Abstract

The subject of the article is financial position of leasing companies, parameters of its assessment and specificity of financial coefficients calculation. The purpose of the article is to develop, systematize and justify the limiting value of main parameters of leasing companies’ assessment that prepare statements in accordance with IFRS. The methodological basis was the systematization and analysis of theoretical and methodological approaches from the scientific works of Russian and foreign scientists and researchers on the economic analysis of leasing companies, and also the corresponding reporting standards. The main conclusion includes the fact that the leasing business has its own specifics and the transformation of the reporting of the leasing company for its subsequent analysis based on known generally accepted coefficients does not give a proper understanding of the financial situation of the leasing company. The article systematizes and describes the main parameters of leasing companies’ assessment. There is the author’s assessment model from the position of the creditor; the article describes the criteria values of the quantitative parameters of the assessment, as well as the qualitative ones. The methodology developed by the authors can be used by specialists working in different companies, which have leasing companies as counterparty. For example, the model can be applied by commercial banks while making decisions about lending of the borrowers — leasing companies. The valuation model presented in the article is a universal tool for assessing the financial and property situation of a leasing company outside of the link to a specific sector or branch of activity in the leasing market; it allows interested persons to evaluate the leasing company, its financial stability, financial position.

Keywords:

leasing, the economic standing of the leasing company, the assessment of the leasing company, the leasing portfolio, leasing company’s equity, leasing company’s assets, the liquidity of the leasing company, the accounting of financial lease transactions