Ratio impact of lease accounting
Schweser Study Notes, Book 3, page 253, says current ratio and working capital are always higher for an operating lease than for a capital lease, and that debt / assets and debt / equity ratios are always lower for an operating lease than for a capital lease.
If both assets and liabilities are increased by a capital lease, then how can one be so sure that the current ratio and working capital will be higher for the operating lease, and that the debt: assets and debt: equity ratios will be higher for the capital lease? |