This is from McKinsey’s Valuation, Chapter on Reorganizing the Balance Sheet.
Original Balance Sheet -
Reorg’d Balance Sheet -
My question is why is “Capitalized operating leases” appearing in both Total Fund Sources & also Total Funds Uses?
When you capitalize operating leases, you are recognizing the leased assets and lease liabilities on balance sheet (just like a finance/capital lease).
I am sorry, I don’t understand - If you look the Fund sources & Fund Uses, all other entries except 2 appear either only on the Uses part or in the Sources part.
Only 2 of them appear both in Sources & Uses.
- Capitalized Operating Leases
- Cumulative amortization and impairment
How come it’s both a source and also a use. And the same numbers appear in both cases.
Thought about it a little and I figured it out now. Thank you.
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