The effects of IFRS 16 on financial ratios: A quantitative study of listed maritime shipping companies

Abstract

IAS 17 was superseded by IFRS 16 on January 1 2019, consequently eliminating the distinction between finance and operating leases in terms of financial reporting. This study examines the effects of IFRS 16 on five key financial ratios using a sample of 35 listed maritime shipping companies. A Wilcoxon signed-rank test is performed, comparing reported 2019 ratios prepared under IFRS 16 with ratios restated to IAS 17 for the same year. The results show statistically significant changes in four out of five ratios examined. ROA increased, as did EBITDA margin, debt-to-equity and debt-to-assets. The test for ROE produced inconclusive results, consistent with existing research. The findings confirm that IFRS 16 has materially affected financial ratios in the maritime shipping sector.