Gearing up

Article Abstract:

The accounting treatment of leases in over 200 listed industrial and commercial companies in the UK is investigated. In each listed company, the capitalized value of assets financed by operating leases is estimated, along with the related liability, using details disclosed in the notes of the company's balance sheet. This capitalization procedure requires estimates of three measures: the average total lease term, the average remaining lease life, and the appropriate interest rate for discounting cash flows to a present value. Results show that the average operating lease liability for the listed companies was 51 million pounds sterling, of which 43 million was long-term and 8 million short-term. Results also showed that the capitalization of leases would increase the net profit margins of the companies examined from 8.7% to 9.8%.

Regulation, Licensing, and Inspection of Miscellaneous Commercial Sectors, Accounting Services Regulation, Evaluation, Liabilities (Accounting), Accounting and auditing, Accounting services, Leases, Disclosure statements (Accounting), Assets (Accounting), Capital, Accounting law

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Time to reconsider?

Article Abstract:

Profit-related pay (PRP) is a portion of an employee's salary that is determined by the company's profits. Linking pay to corporate profits has several advantages, including increasing employees' interest in the company's earnings, and offering pay flexibility much needed in turbulent market conditions. The main features of a PRP scheme include written rules implemented by a company, partnership or sole trader, and registration with the Inland Revenue before implementation.

Methods, Management, Compensation and benefits, Profits, Compensation management, Wages, Wages and salaries, Workers, Corporate profits

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