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The Essentials of Financial Analysis by Samuel Weaver

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CHAPTER THIRTEENLEASING AS A FINANCING AND BUSINESS ALTERNATIVE

No matter the industry or specific business, all firms generally are interested in using buildings and equipment. One way of obtaining their use is to buy them, but an alternative is to lease them. Originally, leasing was most often associated with real estate—land and buildings—but today, virtually any kind of fixed asset can be leased. Leasing is most often a perfect substitute for borrowing. Hence managers should think of the lease/borrow decision rather than the lease/buy decision.

Leasing simultaneously provides for the use of assets and their financing. One advantage over debt is that the lessor (owner of the asset) has a better position than a creditor if the user firm (

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