New accounting norms may alter debt math of companies

A change in accounting norms, visible in results from the current quarter, may result in significant changes to the way debt, profits, and key financial ratios are calculated. The impact could affect already indebted sectors such as telecom and could necessitate changes to covenants surrounding their agreements with lenders. “Companies that have significant operating leases, particularly in the aviation, logistics, shipping sectors, where payments are staggered over periods exceeding one year would be especially affected,” said Ashish Gupta.

This article appeared in Business Standard on 20th June, 2019.