Q13. Under an operating lease (versus a finance lease) which of the following is higher for the lessee?

A)   Cash flow from operations.

B)   Assets.

C)   Cash flow from financing.

Q14. Under a finance lease (versus an operating lease) which of the lessee's financial ratios will be higher?

A)   Debt/equity.

B)   Asset turnover.

C)   Return on equity.

Q15. Compared to an operating lease, a lessee using a finance lease is least likely to have:

A)   higher cash flow from financing during the lease period.

B)   a lower current ratio.

C)   lower net income in the earlier years of the lease.

Q16. Classifying a lease as an operating lease for a lessee, as opposed to a finance lease, will result in:

              Current Ratio                      Debt/Equity Ratio                  Asset Turnover Ratio

A)       Higher                                  Lower                                            Lower

B)       Higher                                 Lower                                             Higher

C)       Lower                                  Lower                                             Higher

Q17. An analyst compares two companies that are identical except that Company X uses finance leases and Company Y uses operating leases. The analyst would expect Company X’s debt-to-equity ratio, relative to Company Y’s, to be:

A)   higher.

B)   lower.

C)   the same.

答案和详解如下：

Q13. Under an operating lease (versus a finance lease) which of the following is higher for the lessee?

A)   Cash flow from operations.

B)   Assets.

C)   Cash flow from financing.

Correct answer is C)

The lessee's cash flows from financing will be higher for an operating lease because the payments made for an operating lease are operating cash outflows, not financing cash outflows. The payments made under a finance lease are split between interest paid and principal. The latter is charged to cash flow from financing.

Q14. Under a finance lease (versus an operating lease) which of the lessee's financial ratios will be higher?

A)   Debt/equity.

B)   Asset turnover.

C)   Return on equity.

Correct answer is A)

The debt/equity ratio will be higher because the finance lease requires the creation of a long-term liability on the balance sheet.

Q15. Compared to an operating lease, a lessee using a finance lease is least likely to have:

A)   higher cash flow from financing during the lease period.

B)   a lower current ratio.

C)   lower net income in the earlier years of the lease.

Correct answer is A)

Since a portion of the lease payment is treated as repayment of principal under a finance lease, cash flow from financing will be lower.

Q16. Classifying a lease as an operating lease for a lessee, as opposed to a finance lease, will result in:

              Current Ratio                      Debt/Equity Ratio                  Asset Turnover Ratio

A)       Higher                                  Lower                                            Lower

B)       Higher                                 Lower                                             Higher

C)       Lower                                  Lower                                             Higher

Correct answer is B)         

For a lessee using operating leases, the current ratio will be higher, the debt/equity ratio will be lower, and the asset turnover will be higher than they would be with finance leases. With operating leases, assets and liabilities are lower.

Q17. An analyst compares two companies that are identical except that Company X uses finance leases and Company Y uses operating leases. The analyst would expect Company X’s debt-to-equity ratio, relative to Company Y’s, to be:

A)   higher.

B)   lower.

C)   the same.

Correct answer is A)

Lease capitalization adds both current and noncurrent liabilities to debt, resulting in a corresponding increase in the debt-to-equity and other leverage ratios. Thus, Company X’s (Debt + Lease)/Equity is greater than Company Y’s Debt/Equity.

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