off-balance sheet transactions investment & finance definition

Financial deals and arrangements that can have a material affect on a company but are structured in such a way that they do not show up on a company’s balance sheet and do not affect a company’s borrowing capacity. Off-balance sheet activities took on huge importance in 2001 when the off-balance sheet deals that Enron Corp. had engaged in came to light. Because the details about off-balance sheet activities are unknown to investors, the off-balance sheet transactions can hide a significant amount of liability.