off-balance-sheet definition: used to describe assets or debts that a company does not need to show on its balance sheet…. Learn more. A common form of off-balance-sheet financing is an operating lease, in which a company rents, rather than buys, a capital asset. In an operating lease, the company must record only the rental payments, and not the whole cost of the asset.

Off balance sheet refers to the assets, debts or financing activities that are not presented on the balance sheet of an entity.. Off balance sheet financing allows an entity to borrow being without affecting calculations of measures of indebtedness such as debt to equity (D/E) and leverage ratios low. A common form of off-balance-sheet financing is an operating lease, in which a company rents, rather than buys, a capital asset. In an operating lease, the company must record only the rental payments, and not the whole cost of the asset.