treasuryXL expert Sugandha Singhal tackles the question of why corporations engage in off-balance-sheet financing (OBSF).


Off-balance-sheet financing allows companies to strategically manage their financial reporting and maintain a healthier balance sheet, thereby enhancing their financial standing and creditworthiness. Usually, this is done to keep the balance sheet healthy and to ensure that the financial covenants like debt-to-equity ratios and leverage ratios are low.

This practice allows corporates to maintain a less leveraged balance sheet thus allowing them a higher capability to borrow. Also, healthier financial ratios means healthier credit rating which directly impacts the company’s cost of borrowing and liquidity position.

Tip: Balance Sheet less leveraged, healthier rating.

Sugandha Singhal

Seasoned Treasury Professional 

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