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Unformatted text preview: They are often used as techniques to fund growth and improve the performance of underperforming companies. Leasing is an alternative approach for securing financing at favorable terms. 2. What is the potential advantage of having a lease categorized as an operating lease instead of a capital lease? If a sale-leaseback is structured as an operating lease, it may improve a firms statement of financial position, improving ratios and debt capacity. If the transaction qualifies as an operating lease, the leased property can be moved off the balance sheet. 3. What is a synthetic lease? A synthetic lease is structured as an operating lease for financial reporting purposes but is considered a financial or capital lease for tax purposes. It is generally available as an alternative to a true lease but is more difficult to structure for a sale-leaseback....
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This note was uploaded on 09/13/2011 for the course FIN 6301 taught by Professor El-asmawanti during the Fall '09 term at University of Texas at Dallas, Richardson.
- Fall '09