@MarsCTrouble is, before it was adopted, lease liabilities were recorded off-balance sheet, so you could have two companies - one totally lease-free and the other with lease commitments up to the gills - and you wouldn't know the difference in the two by just looking at their respective balance sheets.
The only way one could discern the extent of lease millstones around company necks was by trawling through the detailed notes accompanying the financial statements. And often then it was recorded on an ad-hoc and inconsistent basis.
(I recall, in the early 2000s, a small speciality retailer - which had zero borrowings and was profitable - going to the wall. Most people were wondering how that could possibly have happened, but what those people hadn't come to know was that the company was leased to the hilt and couldn't service the leases.)
So, in their defence, the Accounting Czars, that conjured and promulgated AASB16, deemed it more representative if these liabilities were recorded as liabilities on-balance sheet, where they could be more easily observed, instead of in the bowels of the notes to the accounts. The contra-entry on the asset side is the rather clunkily-named "Right-of-use asset".
I think this is an improvement on what went before, but I think they went too far in pulling those lease related expenditures below the EBITDA line which, as discussed, has caused all sorts of EBITDA distortions, specifically to increase the level of EBITDA compared to pre-AASB16 ... something of which the majority of people are to this day still blissfully unaware.
Not just many of us lay practitioners are unaware of it, but in the past few years since AASB16 was adopted, I've even on a number of occasions seen company managers present graphs of EBITDA spanning across pre- and post-AASB16, without making any adjustments to the numbers!
It's little more than accounting origami BS.
(As you suggest, it can be used to advantage. As investors, we almost have an obligation to pursue profits by arbitraging accounting origami BS)
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