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This research aims to assess how capitalization versus footnote disclosure of long-term leases affects the predictive power of financial ratios in bankruptcy scenarios.

March 18, 2026The Accounting Review

The Effect of Lease Data on the Predictive Ability of Financial Ratios.

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RERick ElamMassachusetts College of Pharmacy and Health Sciences

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Implication

Study investigates how lease data influences the predictive ability of financial ratios, indicating implications for financial analysis.

Key Points

This research aims to assess how capitalization versus footnote disclosure of long-term leases affects the predictive power of financial ratios in bankruptcy scenarios.
Analyzed the impact of capitalization on financial ratios
Defined and described key financial ratios related to bankruptcy
Employed statistical methods to test predictive ability of ratios
Investigated limitations and challenges in existing research
Capitalization significantly enhances the predictive ability of financial ratios compared to footnote disclosure
Established tools for financial statement analysis are affected by lease data
Insights indicate that financial analysts should consider lease data for better forecasting of financial distress

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Rick Elam (1975) studied this question.

synapsesocial.com/papers/69ba42dc4e9516ffd37a3941 https://doi.org/10.2308/tar-4501571

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The Effect of Lease Data on the Predictive Ability of Financial Ratios.

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Cite This Study

The Effect of Lease Data on the Predictive Ability of Financial Ratios.

Discussion

Member takes

Implication

Key Points

Cite This Study

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