What is Off-Balance Sheet Items?
Off-balance sheet items are financial obligations or assets that don't appear on the balance sheet — including operating leases (pre-Ind AS 116), SPVs, and contingent liabilities.
Formula
Check Notes to Financial Statements for: contingent liabilities, operating lease commitments, guarantees given, pending litigation.
How to Interpret
Off-balance sheet items can hide significant liabilities. The collapse of Enron was driven by off-balance sheet SPVs. Always read the notes to accounts.
Typical Ranges
Any contingent liability > 10% of net worth deserves attention. Cross-check with auditor qualifications.