Which of the Following Statements Is False

question 1

Multiple Choice

Which of the following statements is false?

• A) Most financial analysts and sophisticated investors consider operating leases (which must be listed in the footnotes of the financial statements) to be additional sources of leverage.
• B) By carefully avoiding the four criteria that define a operating lease for accounting purposes, a firm can avoid listing the long-term lease as a liability.
• C) Because a lease is equivalent to a loan, the firm can increase its actual leverage without increasing the debt-to-equity ratio on its balance sheet.
• D) For most large corporations, the amount of leverage the firm can obtain through a lease is unlikely to exceed the amount of leverage the firm can obtain through a loan.

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Definitions:

Fiedler's Contingency Model

A leadership theory proposing that effective group performance depends on the proper match between a leader's style of interacting with followers and the degree to which the situation gives control and influence to the leader.

Situational Control

The ability to manage and influence the outcome of events based on an understanding and adaptation to the specific dynamic and context of a situation.

Position Power

The authority and influence granted to individuals by their role or position within an organization, allowing them to direct others.

Path-Goal Theory

A leadership theory that suggests a leader's behavior is contingent to the satisfaction, motivation, and performance of their subordinates.