What would be the debt ratio if the equipment were leased

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Reference no: EM131067191

Reyonlds construction needs a piece of equipment that cost $200. reynolds can either lease the equipment or borrow $200 from a local bank and buy the equipment. if the equipment is leased the lease would not have to be capitalized. Reynolds balance sheet prior to the acquisition of the equipment is a follows:

current assets $300 debt $400

net fixed $300 equity $400

total assets $800 total claims $800

a 1. what is reynolds current debt ratio?

2. what would be the company debt ratio if it purchased the equipment?

3. what would be the debt ratio if the equipment were leased?

4. would the company financial risk be different under the leasing and purchasing alternatives?

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Reference no: EM131067191

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What would be the debt ratio if the equipment were leased : Reyonlds construction needs a piece of equipment that cost $200. reynolds can either lease the equipment or borrow $200 from a local bank and buy the equipment. if the equipment is leased the lease would not have to be capitalized. what is reynolds c..

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