What Will Heavy Use of Off-Balance Sheet Lease Financing Tend

question 36

Multiple Choice

What will heavy use of off-balance sheet lease financing tend to do?

• A)make a company appear more risky than it actually is because its stated debt ratio will be increased
• B)make a company appear less risky than it actually is because its stated debt ratio will appear lower
• C)affect a company's cash flows but not its degree of risk
• D)affect the lessee's cash flows but only due to tax effects

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Definitions:

Medicare

A federal health insurance program in the United States primarily for people aged 65 and over, as well as for some younger people with disabilities.

Fair Labor Standards Act

A U.S. law that sets minimum wage, overtime pay eligibility, recordkeeping, and child labor standards affecting full-time and part-time workers in the private sector and in federal, state, and local governments.

Time and a Half

A payment rate that is 1.5 times the employee's regular hourly rate, typically paid for overtime work.

Federal Insurance Contributions Act

U.S. legislation that funds Social Security and Medicare through payroll taxes imposed on both employers and employees.