Investors,lenders,and rating agencies tend to interpret operating leases the same as traditional debt.

Question

Quizplus · Accepted Answer

Operating leases are considered as off-balance sheet financing, but investors, lenders, and rating agencies tend to treat them similar to traditional debt due to their nature of providing long-term liabilities and fixed payments. This is because the future lease payments are a contractual obligation similar to debt payments.

Investors,lenders,and Rating Agencies Tend to Interpret Operating Leases the Same