Off-balance-sheet financing

Anyone out there prepping with Kaplan? Question 11 of the Exam 3 AM session is asking you to determine the effects on the debt-to-equity ratio of capitalizing an operating lease, and it shows the D/E changing from 48% to 69%.

Correct me if I’m wrong, but I don’t think this would effect D/E. An asset and an equal long-term liability will be added to the balance sheet, so neither equity nor debt would actually change. The question depicts debt increasing. The lease adjustment creates a liability, not debt correct?

Lease liability should be included in debt as it’s technically a financing facility as opposed to a trade payable