If a Company Made Extensive Use of Operating Leases to Finance

question 42

Multiple Choice

If a company made extensive use of operating leases to finance assets, what would be the effect on the debt-to-equity ratio?

• A)The debt-to-equity ratio would be understated.
• B)The debt-to-equity ratio would be overstated.
• C)The debt-to-equity ratio would not be affected.
• D)The effect depends on whether the ratio is above 1 or not.

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Definitions:

Hot Days

Periods characterized by higher than average temperatures, often leading to discomfort and the need for cooling measures.

Benthic Zone

The ecological region at the lowest level of a body of water such as an ocean, lake, or stream, including the sediment surface and sub-surface layers.

Lake

Body of fresh water, often classified by nutrient status, such as oligotrophic (nutrient-poor) or eutrophic (nutrient-rich).

Stream

A small, natural body of flowing fresh water, leading from one to another or into a larger body of water.