标题: Ratio impact of lease accounting [打印本页] 作者: whew1110 时间: 2013-4-17 18:22 标题: 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?作者: jcfa2011 时间: 2013-4-17 18:22
op lease = higher net income
net income flows into retained earings and then ito “book value” aka shareholders equity.
so no debt on the top, more E in the bottom = lower debt/equity.
man, you are taking me back to maY!!!! i had arrows all over my books indicating what flowed into what. : )作者: ishfaque 时间: 2013-4-17 18:22
daj – how does higher income on operating lease signifies higher current ratio and working capital?作者: MiniMe7 时间: 2013-4-17 18:22
op lease has no interest liability, so CR is higher.
CR = CA/CL作者: cyber21 时间: 2013-4-17 18:22
i think largely it is bcoz of current portion of finance lease that is absent in operating lease… interest is rather small as compared to current potion of installment…
