Debt displacement is associated with leases because:
A) all assets not purchased with equity use debt financing.
B) debt is always a cheaper source of financing and is lost as leasing is used.
C) ICA3065 and the CCRA mandate debt displacement.
D) lease financing is all debt and causes an imbalance in the optimal debt to equity ratio which reduces future debt financing.

Question

Quizplus · Accepted Answer

Lease financing is considered as a form of debt, which can affect a company's debt-to-equity ratio and limit its capacity to take on additional debt in the future.

Debt Displacement Is Associated with Leases Because