What is OFF BALANCE SHEET FINANCING (OBSF)?

The financial contribution of sources that are neither equity investors or lenders, and thus are not included in the presentation of the asset and liability balance sheet. Through the use of OBSF,a firm is able to increase its return on investment by enhancing its leverage ratio, and also prevents it from breaching any loan clauses. However, the disclosure of the OBSF is required in the footnotesof the balance sheet.

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