I am reading on this topic as well and have some question as well. Can you please elaborate on how finance lease lowers the current ratio, working capital, and leverage?
For current ratio, is it because finance lease is recorded as PP&E whereas the liability is in current liability? Thus, CA/CL is lowered? I guess that same logic applies for Working capital right?
As for leverage, how does debt/assets change when we are inputting asset/liability by the same amount to begin w/?
Please help, thank you! |