|
|
The IASB demonstrates this incomparability through a simplified case study and offer an adjustment approach to compute comparable FCF measures that makes use of new information provided under IFRS 16 Leases. Investors may find this adjustment approach useful in making cross-company comparisons.
The IASB believes investors will benefit from the implementation of IFRS 16 as it will lead to a better reflection of the economics of leasing on the financial statements of lessees. Additionally, IFRS 16 disclosures will allow investors to better assess the impact of leases on the financial position, performance and cash flows of the company. For example, companies will have to disclose quantitative information related to lease costs, cash flows, and assets for all material leases. This will include information such as the addition to RoU assets, break-down of the carrying value and depreciation of RoU assets by asset class, and a maturity analysis of all lease liabilities.
The IASB believes analysts can look forward to making use of this wealth of information in their analysis of free cash flow by revisiting their own approach to computing the metric.