---
alternate_lang: de
date_added: '2026-06-09T06:51:03.919000+00:00'
date_modified: '2026-07-06T10:01:57.887023+00:00'
description: 'From 20% to 13.3% equity ratio — simply due to thoughtless financing?
  A simple example: A company with EUR 1 million in total assets and an equity ratio
  of 20%.'
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- LinkedIn
lang: en
title: From 20% to 13.3% equity ratio — simply due to thoughtless financing?
type: article
url: http://leasing-pilot.com/en/news/from-20-to-13-3-equity-ratio-simply-due-to-thoughtless-financing/
---



1. [News](/en/news/)
2. From 20% to 13.3% equity ratio — simply due to thoughtless financing?

# From 20% to 13.3% equity ratio — simply due to thoughtless financing?

From 20% to 13.3% equity ratio — simply due to thoughtless financing? A simple example: A company with EUR 1 million in total assets and an equity ratio of 20%.

![From 20% to 13.3% equity ratio — simply due to thoughtless financing?](/media/thumbs/news_image/linkedin-3288c489e8.webp.400x400_q85.webp)


From 20% to 13.3% equity ratio — simply due to thoughtless financing?   
  
A simple example: A company with EUR 1 million in total assets and an equity ratio of 20%. Higher would be preferable from a bank's perspective, but it's a start.   
  
Now a strategic investment is on the horizon — a new production machine worth EUR 500,000. The company's bank is kind enough to finance it through a loan.  
  
What happens to the balance sheet as a result?  
  
🔹 Total assets increase to EUR 1.5 million due to balance sheet expansion.  
🔹 Equity remains the same in absolute terms.  
🔹 The equity ratio drops sharply from 20% to 13.3%.  
  
At first glance, this may sound like dry accounting. However, it has very real consequences for bank ratings, equity covenants, and credit reports — all of which matter to suppliers and credit insurers.  
  
Yet this effect is entirely avoidable.  
  
If the same investment is structured strategically through leasing, the picture looks completely different:  
  
🔹 The asset does not appear as a line item on the balance sheet.  
🔹 The lease liability does not burden the liabilities side.  
🔹 Total assets remain stable at EUR 1 million.  
🔹 The equity ratio remains intact at 20%.  
  
Leasing prevents balance sheet expansion.   
It's not a bug, it's a feature.   
This is the accounting treatment of finance leases under the leasing decrees applicable to HGB (German Commercial Code).  
  
The decision between a loan and leasing is therefore far more than a simple comparison of interest rates and terms.  
  
👉 It is also a matter of strategically managing your balance sheet structure.  
P.S. Leasing is likely to come out ahead on tenor as well...  
  
What role does the equity ratio play in your company?

[View on LinkedIn](https://www.linkedin.com/feed/update/urn:li:activity:7470004521587466241/)