chandsingh

No, no, because it is EBIT, dont add the Interest Expense portion to get your new EBIT.

Adjusted EBIT = Prev EBIT + regular Lease Rental payment - Depreciation on capitalized lease

Interest portion of the lease payment will be added to the denominator in EBIT Interest Coverage Ratio.

Edit: Thanks janakisri for pointing it out. I think knowing Operating Lease to Capital Lease conversion is very important for L2 exam.



Edited 1 time(s). Last edit at Thursday, May 20, 2010 at 10:11PM by rus1bus.