What happens to the income statement and cash flow statement, if you use operating leases or capitalize leases?
Capital leases have higher debt. They have lower income at first but then higher income later. Their operating income is higher though because the payments net of interest go into the “financing section” (let me know if this is correct) as oppose to the whole payment being an expense if it was an operating lease.
higher d/e (worse credit quality ratios in general) (note: for capitalized expenses you have lower d/e higher cfo, lower cff : (note: for capitalized expenses you have lower cfi, not cff) cash flows - same
ryan- you would have a higher d/e ratio for capitalized expenses because you have more debt on your balance sheet correct?
gameday- no. there is no liability created. there is one created w/ lease
sorry one of my worst topics…can you go into a little (or a lot) more detail. tx