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Sir this one is from Bpp
Sale and leaseback can reduce gearing
Treating finance lease as operating lease can reduce gearing
Can u please explain how?“Treating finance lease as operating lease can reduce gearing”
Finance lease obligations are, in the majority, long term debt and would thus be included within ‘borrowings’
To take them out of borrowings (and also out of assets) will reduce both those elements of the gearing calculation but most likely will reduce borrowings by a greater percentage than the percentage reduction of assets
OK?
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