Which Statement Is Correct in Comparing Capital Leases to Operating

question 124

Multiple Choice

Which statement is correct in comparing capital leases to operating leases?

• A) A capital lease will have a higher asset turnover compared to an operating lease.
• B) A capital lease will increase the return on total assets compared to an operating lease.
• C) A capital lease will have a lower debt-to-equity ratio compared to an operating lease.
• D) A capital lease will have a higher debt-to-equity ratio compared to an operating lease.

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Definitions:

Modular Bill

A document listing components or parts in a structured format that supports manufacturing or assembly of modular or customizable products.

Master Production Schedule

A detailed plan that outlines exactly what should be produced, in what quantities, and when, to satisfy customer demand.

Aggregate Plan

A plan that determines the resources needed to meet the forecasted demand for a company's products or services over a medium to long-term horizon.

Inventory Record

A document or system that tracks the goods and materials held by a business, detailing quantities, locations, and statuses.