Instead of increasing its long-term debt by borrowing money to - 15496

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yousafbhutta

yousafbhutta

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Price: $0.50
  • From: Business,
  • Posted on: Mon 04 Mar, 2013
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Request Description

Instead of increasing its long-term debt by borrowing money to purchase new stereo equipment, Jay's Jams Inc. decides to lease the equipment. How does this affect its long-term debt ratio?
 
It will decrease.
 
It will increase.
 
It will remain unchanged.
 
The effects are unknown without the amount of the lease obligation.
                                       

Solution Description

 

Instead of increasing its long-term debt by borrowing money to purchase new stereo equipment, Jay's Jams Inc. decides to lease the equipment. How does this affect its long-term debt ratio?