Heavy use of off-balance-sheet lease financing will tend to a. affect the lessee

Question

Heavy use of off-balance-sheet lease financing will tend to a. affect the lessee's cash flows but only due to tax effects. b. have no effect on either cash flows or risk because the cash flows are already reflected in the income statement. c. make a company appear less risky than it actually is because its stated debt ratio will appear lower. d. make a company appear more risky than it actually is because its stated debt ratio will be increased. e. affect a company's cash flows but not its degree of risk. Heavy use of off-balance-sheet lease financing will tend to a. affect the lessee's cash flows but only due to tax effects. b. have no effect on either cash flows or risk because the cash flows are already reflected in the income statement. c. make a company appear less risky than it actually is because its stated debt ratio will appear lower. d. make a company appear more risky than it actually is because its stated debt ratio will be increased. e. affect a company's cash flows but not its degree of risk.

Explanation / Answer

c. make a company appear less risky than it actually is because its stated debt ratio will appear lower.

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