Off Balance Sheet - OBS


DEFINITION of 'Off Balance Sheet - OBS'

An asset or debt that does not appear on a company's balance sheet. Items that are considered off balance sheet are generally ones in which the company does not have legal claim or responsibility for.

For example, loans issued by a bank are typically kept on the bank's books. If those loans are securitized and sold off as investments, however, the securitized debt is not kept on the bank's books. One of the most common off-balance sheet items is an operating lease.


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BREAKING DOWN 'Off Balance Sheet - OBS'

Off balance sheet items are of particular interest to investors trying to determine the financial health of a company. These items are harder to track, and can become hidden liabilities. Collateralized debt obligations, for instance, may become a toxic asset before investors realize a company's exposure.

  1. Collateralized Mortgage Obligation ...

    A type of mortgage-backed security in which principal repayments ...
  2. Collateralized Debt Obligation ...

    An investment-grade security backed by a pool of bonds, loans ...
  3. Toxic Assets

    An asset that becomes illiquid when its secondary market disappears. ...
  4. Collateralized Bond Obligation ...

    An investment-grade bond backed by a pool of junk bonds. Junk ...
  5. Off-Balance-Sheet Financing

    A form of financing in which large capital expenditures are kept ...
  6. Encumbrance

    A claim against a property by a party that is not the owner. ...
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  1. What types of assets may be considered off balance sheet (OBS)?

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    The calculation for working capital includes any prepaid expenses that are due within one year, since such prepaid expenses ... Read Full Answer >>
  3. How do I read and analyze an income statement?

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  4. Does working capital include short-term debt?

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  5. Do dividends affect working capital?

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