While doing the expercises, I’ve noticied a wierd quesiton:
“Compared to holding securitized finance receivables on the balache sheets, treating them as sold had the effect of reducing Software Services’ reported financial leverage by X”.
The answer to the question says that if the receivables where on the balance sheet, total assets would grow, but the equity wouldn’t chage. Thus, the ratio would grow.
Conisdering, that securization simply exchnages receivables for cash, how the total assets amount could be impacted?
The original question is found under the reading R27 - Q17.