liquidity

janakisri Wrote:
-------------------------------------------------------
> If you capitalize some payments , you effectively
> treat them as debt and the payments on it are not
> an operating expense.
>
> If you avoid capitalizing them , as WalMart and
> some others like JetBlue have done , you treat it
> as lease payments i.e. rentals, which are
> operating expense.
>
> Your choice will drive higher EBIT ( capitalizing
> ) or lower EBIT ( leasing/renting ).
>
> You may ask why anyone would do that. Its to show
> less assets on your bs and therefore show less
> leverag, making you look better to a foolish
> investment community


+1. You have covered both areas. The Income effect and the BS explanation.