Economics · Corporate Finance
Historically under traditional accounting, how did acquiring an asset through an operating lease affect the debt-to-equity ratio of a company?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1It did not impact the debt-to-equity ratio directly as the lease obligation was kept off-balance sheet✓
- 2It systematically reduced the debt-to-equity ratio by exactly 50%
- 3It increased the debt-to-equity ratio by 100%
- 4It caused a direct reduction in equity capital
Correct answer
It did not impact the debt-to-equity ratio directly as the lease obligation was kept off-balance sheet
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