Ratio Impact of Lease Accounting - CFA Level II (FRA)

	Finance Lease	Operating Lease
Current Ratio (CA/CL)*	Lower	Higher
Working Capital (CA – CL)*	Lower	Higher
Asset turnover (Revenue/TA)	Lower	Higher
Fixed Asset turnover(Rev./Net Fixed Asset)	Lower	Higher
Return on Assets (NI/TA) in early years	Lower(due to higher fixed assets)	Higher( due to high NI and lower asset base)
Return on Asset (NI/TA) in subsequent years	Higher	Lower
Return on Equity (NI/Shareholder’s equity) in early years	Lower	Higher
Return on Equity (NI/Shareholder’s equity) in subsequent	Higher	Lower
Debt-to-Asset ratio	Higher	Lower
Debt-to-Equity ratio	Higher	Lower