Reflections of TFRS 16 leases standard on financial statements: Applications on airline companies

Lease is one of the financing methods frequently used by businesses. Operating lease and leasing (financial lease) are the most common lease methods for the businesses. Aside from that the operating lease method is used frequently, it has been criticized by some parties. The subject of this criticism has been the off-balance sheet financing method used by lessees. In other words, the liabilities stem from operating lease has been not showed on the balance sheets, it has been showed on statement of comprehensive income by expensing. What parties dealing with this problem recommend doing has been capitalisition. In other words, the off-balance sheet lease liabilities has been started to be transferred to balance sheets. The purpose of this has been to ensure transparency of financial statements for users of financial statements. In the study, the balance sheet and comprehensive income statements of the two leading airline companies in Turkey for 2017 has been taken into consideration ve the off-balance sheet liabilities about operating lease has been capitalised. Then the new balance sheets and the new statements of comprehensive income has been constituted and these statements has been analyzed by ratio analysis method. Considering the new balance sheets that are constituted based on the TFRS 16, there has no change in current assets. There has been increase in non-current assets, current liabilities and non-current liabilities, whereas there has been a decrease in equity. As for statements of comprehensive income, the current minimum total operating lease payments in cost of sales hasn't been regarded. So there has been decrease in cost of sales. This situation has led that there has been increase in gross profit. There has emerged an interest expense which has led to increase on finance expenses due to the new standard. However, because total current operating lease payments is more than interest expense, there has been increase in EBIT. Finally, these financial statements items and ratios achieved has been interpreted.