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Dear sir, why selling an asset under sale and lease back agreement made reduce gearing? Thanks
Hi,
It will depend on the type of the sale and leaseback arrangement and whether we have control. If there is an outright sale then there will be no liability. If there is no outright sale then there is a liability. So, dependent on whether there is a liability or not will determine the impact on the gearing (debt/equity).
Thanks
Hi, if there is no outright, there is a liability increase and I think gearing will increase also.Please correct me if it is not true.Thank you so m?ch.
Correct! Yes, the additional liability will be debt and so increase the gearing. Great work, well done.
Hi, but the answer in BPP is reduce gearing, do you think it is a mistake ?Thanks
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