Why is the current ratio always higher if a firm takes an operating lease rather than a capital lease? What part of the current assets and current liabilities is affected? Is it simply the fact that a) current assets is the same in both scenarios and b) the current liabilities under a capital lease is increased by the current portion of the lease obligation thereby reducing the ratio?
Edit: I think I was wrong. What it comes down to is that the next lease payment is accounted for as a current liability which reduces the ratio. Check out P.522 in Vol. 3 of CFAI 2008 Text.