Lease obligations are included in certain leverage ratios because leases:
A) require the payment of interest.
B) represent long-term fixed obligations.
C) must be financed through a bank.
D) are perpetual obligations.

Question

Quizplus · Accepted Answer

Leases represent long-term fixed obligations, meaning they require ongoing payments over an extended period of time. This makes them a factor in calculating leverage ratios, such as the debt-to-equity ratio, which measure a company's ability to meet its financial obligations.

Lease Obligations Are Included in Certain Leverage Ratios Because Leases