This study analyzes the impact of the international accounting standard IFRS 16 on key financial metrics for retail companies in Sweden and Poland. The implementation of IFRS 16 has significantly altered the accounting treatment of lease agreements, requiring that previously off balance-sheet operating leases now be recorded as both assets and liabilities. This was expected to affect several financial ratios, including debt ratio, EBITDA, EBIT, ROE, and ROA.
The study employs a quantitative research design, drawing on secondary data from financial reports of publicly listed retail companies in Sweden and Poland, both before and after the implementation of IFRS 16. Data was gathered from Orbis and company reports, covering the fiscal years 2018 and 2019. Statistical analyses were conducted to test the hypotheses regarding changes in the aforementioned financial metrics due to IFRS 16.
The study confirms a significant increase in the debt ratio in both Sweden and Poland, in line with expectations that IFRS 16 would lead to higher reported liabilities. EBITDA increased significantly in Sweden, while the increase in Poland was not statistically significant. EBIT and ROA decreased unexpectedly in both countries, suggesting that factors beyond lease accounting,such as economic conditions or market dynamics, may have influenced these results. ROE saw a slight increase in both Sweden and Poland, but the changes were not statistically significant.
IFRS 16 has led to substantial changes in the financial reporting of retail companies in both Sweden and Poland, primarily through an increase in the debt ratio. However, the effects on profitability measures such as EBITDA, EBIT, and ROA were mixed, highlighting the complexand potentially long-term impact that IFRS 16 may have on financial reporting. Future research should focus on examining the long-term effects of IFRS 16, particularly regarding leasing strategies and capital structure across different countries and sectors.