Off-balance-sheet-transactions meaning

Financial deals and arrangements that can have a material affect on a company but are structured in such a way that they do not show up on a company’s balance sheet and do not affect a company’s borrowing capacity. Off-balance sheet activities took on huge importance in 2001 when the off-balance sheet deals that Enron Corp. had engaged in came to light. Because the details about off-balance sheet activities are unknown to investors, the off-balance sheet transactions can hide a significant amount of liability.
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