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Jemshah
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Asked: 2022-12-29T04:01:38+00:00 In:

Highlight three advantages of leasing as a source of finance. (3 marks)July 2020

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Highlight three advantages of leasing as a source of finance. (3 marks)July 2020

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    1. Flexibility: Leasing allows companies to obtain the use of assets without committing to a long-term purchase, which gives them the flexibility to upgrade to newer equipment as needed or to adjust their assets in response to changes in business needs.
    2. Lower upfront costs: Leasing typically requires lower upfront costs compared to buying, as it does not involve a large down payment or the need to raise capital to purchase the asset outright.
    3. Off-balance sheet financing: Leasing can be considered off-balance sheet financing, as the leased assets do not appear on the company’s balance sheet as a liability. This can help a company maintain a stronger financial position and potentially improve its debt-to-equity ratio.
    4. Tax benefits: Leasing can also provide tax benefits, as the payments made under a lease are typically treated as operating expenses and can be deducted from a company’s taxable income
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