"This new rule, proposed on August 17th by the two regulators (IASB and FASB), has shocked companies everywhere.
The change will make a lot of firms look wobblier: a survey by PricewaterhouseCoopers, an accounting firm, found that it would add about 58% to the average company’s interest-bearing debt.
Many companies are close to their maximum debt limits, and the new rules could push them over the edge. Small wonder they are howling.
Other companies will see their apparent return on capital plunge. Many firms will see their debt-to-equity ratio rise and their ability to borrow fall."
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