Comparing and contrasting lease versus purchase options Essay

It is important to know the difference between lease bargain for and lease option. The use of leases flowerpot also have an impact on a companys liquidity profitability ratios (Schroeder, Clark, & Cathey, 2005). First the scheme should force field the expenses of what it would cost to lease as to what it cost to purchase this can be done with a reduced cash flow evaluation. The study would comp are the expense of the alternatives by taking into account the scheduling of payments, impose benefits, and interestingness rates on any loans, and other financial arrangements. To view an evaluation, the company has to be sure about the financially viable liveliness of equipment, this would also include the salvage value and depreciation of such equipment. hither is a brief description of what debt pay is referred as. Debt finance is when funds is borrowed by an organization and has to be repaid back with interest. Debt financing does dilute the ownership of the company.Debt fina ncing can be looked at as either a long-term debt or short-term debt. Two examples of debt financing are the issue of Bonds and a Line of Credit. Line of Credit is a bank loan where a company can draw out funds when times are slow, and money is needed. Bonds can be issued as form of debt financing. Bonds are commonly long-term and come with a maturity ranging from seven to 30 years. These bonds are usually underwritten by a bank or securities firm who support in the sales of these bonds. Equity financing is another method of increase money by selling company stock to outside investors. In return for their interest in buying stock, the shareholder receives ownership interest in the company.An return to using debt is that the debt helps to produce and hold greater investment funds returns for the companys equity holders. When using debt financing the primary advantage is that it allows the founders to hold ownership and control of the company. The disadvantage to this is that itr equires smaller business to assoil monthly payments of both principal and interest. The use of capital structure depends on what a company can spread some small companies cannot afford debt financing like larger corporations. I think equity financing is a good way for smaller companies to raise capital because the owner can still hold on to control and raise money at the same time.ReferenceSchroeder, R.G., Clark, M.W., & Cathey, J.M. (2005). Financial Accounting Theory and depth psychology (8th Ed.). Hoboken, New Jersey John Wiley & Sons.