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If a person gets into an operating lease, will it affect the traditional gearing ratios?
Does traditional gearing ratios include operating gearing as well?No they don’t affect traditional gearing ratios.
But it is a good point to make if there is a written part of a question relating to leasing.
They do affect the operational gearing because they are a fixed cost.
It was you who used the word ‘traditional’!!!
I assumed that you were referring the the normal ‘gearing ratio’ which measures the level of financial gearing (and is explained in Chapter 13 of the free lecture notes and the lectures that of with it).
Actually I saw the term traditional ratios in kaplan mcq question.
Thank you sir. 🙂
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