When comparing a capital lease to an operating lease, which of the following statements about the capital lease is FALSE? A capital lease will have: A) a lower current ratio. B) higher cash flow from financing during the lease period. C) a higher debt to equity ratio. D) lower net income in the earlier years of the lease.
I think the answer is B
u pay the “debt” of the capital lease through CFI : lower CFI
I’d say C.
C is not the right answer because the company that has a capital lease will have a debt to equity ratio higher than the company having the operating lease. The question searches for the false statement.
the answer is (b), CFF is lower for a capital lease
map can u have a look at http://www.analystforum.com/phorums/read.php?11,741781 thanks btw it is B here