Quincy Owns a Metal Fabricating Company

question 33

Multiple Choice

Quincy owns a metal fabricating company. He is desperately in need of working capital in order to carry out several large orders. Therefore he sells his heavy stamping equipment to Beneficial Leasing Inc. in a five- year purchase lease plan. This arrangement amounts to

• A) an operating lease.
• B) a sale and leaseback.
• C) the mortgaging of assets.
• D) the ducktail plan.
• E) one of the highest costs in asset financing.

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Definitions:

External Financing

Funding acquired from sources outside the company, such as loans, stock issues, or bonds.