An advantage of an operating lease is that is does not add a liability or an asset to the lessee's balance sheet, thereby not affecting certain liquidity and financial leverage ratio's.

Question

Quizplus · Accepted Answer

This statement is true. Since an operating lease is a type of off-balance sheet financing, it is not recognized as an asset or liability on the lessee's balance sheet. As a result, it may not affect certain liquidity and financial leverage ratios.

An Advantage of an Operating Lease Is That Is Does