Answer: The term structure of interest rates and the time to maturity are always directly related.
Explanation:
The term structure of interest rates shows the relationship between interest rates and the different maturity periods of bonds. Normally, these move in the same direction i.e., the higher the maturity period, the higher the interest rate.
This however is not a given. It might be expected for instance that interest rates might drop in future. In such a situation, the interest might reduce with a longer maturity period which would depict an inverse relationship instead of a direct one.
Tom Scott is the owner, president, and primary salesperson for Scott Manufacturing. Because of this, the company's profits are driven by the amount of work Tom does. If he works 40 hours each week, the company's EBIT will be $590,000 per year; if he works a 50-hour week, the company's EBIT will be $705,000 per year. The company is currently worth $3.6 million. The company needs a cash infusion of $1.7 million, and it can issue equity or issue debt with an interest rate of 10 percent. Assume there are no corporate taxes.
Required:
a. What are the cash flows to Tom under each scenario?
b. Under which form of financing is Tom likely to work harder?
Solution :
a). The company requires a cash infusion of amount $ 1.70 million. If the company issues any debt, annual interest payments is :
Interest = $ 1,700,000
Interest = $ 170,000
The cash flow to the owner is EBIT - (the interest payment) :
40 hour week cash flow = $ 590,000 - $ 170,000
= $ 420,000
50 hour cash flow = $ 705,000 x 67.92%
= $478,836
b). Tom will be working harder under the debt issue as the cash flow will be higher. He will also gain more under this case of financing since the payments to the bond holders are fixed. Under this equity issue, the new investors share the proportionality in his hand work, which will reduce the propensity for his additional work.
jacks immediate boss lets him set his own schedule, does not offer support or direction, and is generally hands-off. Jack's boss is following which of the following leadership philosophies?
Answer:
Laissez-faire
Explanation:
Leadership forms are often diverse depending on how the leaders or heads decide to run their team. The laissez-faire leadership stuole is one which is popular and categorized based on the the level of freedom afforded to team members. The laissez-faire leadership style is one which is very open such that decision making are usually left in the hands of team members and they are being afforded the chance and power to make decisions with very little oversight from the leader. This is similar to the leadership style portrayed by Jack's boss who leaves Jack to set his schedule and make decisions.
Checking accounts at a local bank carry an average balance of $3000. The bank turns over its balance 3 times a year. On average, how many dollars flow through the bank each month?
Answer:
75,000
Explanation:
I think? not shure
Margaret Moore started her own consulting firm, Carla Vista Consulting, on May 1, 2020. The following transactions occurred during the month of May.
May:
1 Trixie invested $7,600 cash in the business.
2 Paid $950 for office rent for the month.
3 Purchased $600 of supplies on account.
5 Paid $160 to advertise in the County News.
9 Received $4,500 cash for services performed.
12 Withdrew $1,200 cash for personal use.
15 Performed $5,600 of services on account.
17 Paid $2,000 for employee salaries.
20 Made a partial payment of $400 for the supplies purchased on account on May 3.
23 Received a cash payment of $3,600 for services performed on account on May 15.
26 Borrowed $5,500 from the bank on a note payable.
29 Purchased equipment for $4,000 on account.
30 Paid $350 for utilities.
Required:
Show the effects of the previous transactions on the accounting equation.
Answer:
1. Equity will increase
2. Asset Decrease
3. Asset and liability increase
4. Asset decrease
5. Asset increase
6. Equity decrease
7. Asset increase
8. Asset decrease
9. Asset and liability decrease
10. No effect
11. Asset and liability increase
12. Asset increase
13. Asset decrease
Explanation:
Accounting equation reflects the impact on the business for every transaction. There are three main components of an accounting equation. Asset, Liabilities and Equity. If one component increase the other might increase, decrease or have no effect.
Asset = Liabilities + Capital
Based on the marginal principle, would it make sense to for a business to expand their hours of operation if they project $1,500 of additional revenue per week, however they also project increase expenses of $1,000 for salaries, $150 for utilities and $50 for misc. expenses. No, because they will lose $300 per week Yes, because they will net $300 per week Yes, because they will gain $1,500 of revenue per week No, because they will incur $1,200 of expenses per week.
Answer:
Yes, because they will net $300 per week
Explanation:
According to the marginal principle, production can be increased if marginal revenue would exceed marginal cost. It means that the venture would be profitable
Marginal cost is the increase in cost as a result of increasing output by one unit.
total marginal cost = 1000 + 50 + 150 = 1200
Marginal revenue is the increase in revenue as a result of increasing output by one unit.
Marginal revenue exceeds marginal cost by (1500 - 1200) 300. Thus, hours of operation can be increased
The owner of Artisanal Chips etc. produces three flavors of artisanal corn chips marketed at new college graduates — pumpkin (P), chipotle adobo (A) and basement (B). He has a limited amount of the three ingredients used to produce these chips available for his next production run: 1,000 ounces of salt, 2,000 ounces of maize, and 1,200 ounces of herbs. A bag of pumpkin chips requires 2 ounces of salt, 6 ounces of maize, and 1.75 ounces of herbs to produce; while a bag of chipotle-adobo chips requires 6 ounces of salt, 6 ounces of maize, and 5 ounces of herbs. A bag of basement chips requires 1.75 ounces of salt, 3.5 ounces of maize, and 1.5 ounces of herbs. Profits for a bag of basement chips are $0.40, for chipotle-adobo chips is $0.60, and for a bag of pumpkin chips $0.50.
For the production combination of 100 bags of each flavor of chips, which of the three resources is (are) not completely used?
a. salt and herbs only
b. salt and maize only
c. herbs maize and salt
d. maize only
Answer:
Artisanal Chips
For the production combination of 100 bags of each flavor of chips, the three resources are not completely used are:
c. herbs, maize, and salt
Explanation:
a) Data and Calculations:
Ingredients Ounces Usage per Bag
Pumpkin Chipotle Basement
Salt 1,000 2 6 1.75
Maize 2,000 6 6 3.5
Herbs 1,200 1.75 5 1.5
Basement Chipotle Pumpkin
Profits for a bag $0.40 $0.60 $0.50
Total ingredients required for 100 bags of each:
Resources Pumpkin Chipotle Basement Total Unused
Usage Resources
Salt 1,000 200 600 175 975 25 ounces
Maize 2,000 600 600 350 1,550 450 ounces
Herbs 1,200 175 500 150 825 375 ounces
On January 1, Power House Co. prepaid the annual rent of $19,000. Journalize this transaction.
Answer:
Date Account titles and explanation Debit Credit
Jan 1 Prepaid rent $19,000
Cash $19,000
(To record the prepaid the annual rent of $19,000)
Your company has earnings per share of $ 4.19. It has 1.9 million shares outstanding, each of which has a price of $59. You are thinking of buying TargetCo, which has earnings per share of $ 2.10, 1.9 million shares outstanding, and a price per share of $ 21.You will pay for TargetCo by issuing new shares. There are no expected synergies from the transaction. If companies in the same industry as TargetCo are trading at multiples of 12 timesearnings, what would be one estimate of an appropriate premium forTargetCo?
TargetCo has $2.10 in earnings, so if other companies in its industry are trading at 12 times earnings, then a starting point for a valuation of TargetCo in this transaction might be ________ pershare, implying a _________ premium
Answer:
If the current earnings per share of TargetCo. are $2.10, and the times earnings multiple is 12, the relative valuation should result in a $2.10 x 12 = $25.20 per stock. This means that the premium per stock = $25.20 - $21 = $4.20, and the total premium paid for all the 1.9 million shares = $7.98 million.
Before you started applying for college, a job recruiter offered you a full-time cashier position at a department store, earning an after-tax salary of $21,000 per year. However, you turn down this offer and attend your first year of college. The additional monetary cost of college to you, including tuition, supplies, and additional housing expenses, is $32,000. You decide to go to college, probably because:______.
A. You value a year of college at $22,000.B. You value a year id college of $34,000.C. You value a year of college less than $34,000.D. You value a year of college at more than $56,000.
Answer:
Option D (You value..........$56,000) is the right response.
Explanation:
The overall expenditure of taking part throughout the school for the very first year would be the amount of such loss of university income as well as extra cash.Whenever you anticipate receiving stronger employment wages from university education, therefore during the 1st year that you estimate upwards of expenditure of $53,000 for higher learning.Other options aren't linked to the specific circumstance. Thus, the response seems to be the right one.
Daley Company estimates uncollectible accounts using the allowance method at December 31. It prepared the following aging of receivables analysis. Days Past Due Total 0 1 to 30 31 to 60 61 to 90 Over 90 Accounts receivable $570,000 396,000 90,000 36,000 18,000 30,000 Percent uncollectible 1% 2% 5% 7% 10% a. Complete the below table to calculate the estimated balance of Allowance for Doubtful Accounts using the aging of accounts receivable method.b. Prepare the adjusting entry to record Bad Debts Expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $3,600 credit.c. Prepare the adjusting entry to record bad debts expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $100 debit.
Answer:
a) calculate the estimated balance of Allowance for Doubtful Accounts using the aging of accounts receivable method is $11,820.
b) The adjusting entry to record Bad Debts Expense using the estimate is $8220.
c) The adjusting entry to record bad debts expense using the estimate is $11,920.
Explanation:
Which mineral resource is used in chemical industry?
Answer:
Carbon feedstocks – oil, gas, coal, renewables, and CO2 – are the base of organic chemistry that creates about 90% of the value of the chemical industry. Some inorganic feedstocks are regarded as critical: Noble metals, some rare earth elements, indium, lithium, phosphate, etc.
true or false
Macroeconomics deals with the behaviour of individual economic units.
Answer:
false. it deals with ecomonics as a whole. it's in the name dude
Answer:
False
Explanation:
Macroeconomics looks at the economy as a whole. It focuses on broad issues such as growth of production, the number of unemployed people, the inflationary increase in prices, government deficits, and levels of exports and imports.
Assume that Jones Company made a payment on a mortgage. It included $100 of principal and $150 of interest. What would the journal entry be to record the payment?
Answer:
the journal entry be to record the payment
Debit : Interest expense $150
Debit : Mortgage Payable $100
Credit : Cash $250
Explanation:
When a payment for mortgage is made, we recognize the interest expense that accrues and also derecognize the part of capital repayment made for the mortgage. That means Mortgage Payable decreases, Interest expense increases and Cash account decreases with the to total of interest and principle.
If the beginning balance in Firestone Auto Repair's inventory account was a $4,000 debit, what is the new balance in the inventory account after considering the new purchases?
Answer:
$9,870
Explanation:
The computation of the new balance in the inventory account after considering the new purchases is given below;
New balance is
= Beginning balance + value of the purchase.
where,
Value of the purchase = purchase cost + freight cost- purchase discount
= $6,000 + $170 - $300
= $5,870
So,
New balance is
= $4,000 + $5,870
= $9,870
Kinds of managers An example of a position that a team leader would hold is: vice president. department manager. group facilitator. divisional manager Using your knowledge of the different levels of management in organizations·indicate whether each statements most middle-level, top-level managers, or team leaders. el, to aaay to ist ere Statement Project managers and others who bring people together from various parts of the organization to perform a task are in this layer of management. Having titles like chief executive officer (CEO), president, chairperson, and director general, these managers report directly to the board of directors. These managers are responsible for guiding and coaching the employees who actually do the work of the organization Level Middle managers Top managers First-line managers
Answer:
a. A Team leader would be a group facilitator.
Team leaders are meant to coordinate the activities of small groups in a company to achieve certain short term targets. They are therefore most suited to be group facilitators.
b.
Project managers and others who bring people together from various parts of the organization to perform a task are in this layer of management. ⇒ MIDDLE MANAGERS
Middle level managers are in charge of departments and divisions and have the goal of achieving the mandate set by the Top management. They do so by bringing together various parts of the organization under a division and work to achieve the set goals.
Having titles like chief executive officer (CEO), president, chairperson, and director general, these managers report directly to the board of directors. ⇒ TOP LEVEL MANAGERS
Top level managers sit on top of the hierarchy of the entire organization and report directly to the Board of Directors. They include positions like the CEO, President, CFO, Director-General, etc. They set the overall strategic goals of the company.
These managers are responsible for guiding and coaching the employees who actually do the work of the organization ⇒ FIRST-LINE MANAGERS.
First-line managers are the closest to the employees and so supervise them to carry out the goals passed onto them by first level managers. They include positions like office managers and plant supervisors.
The Texas Consolidated Electronics Company is contemplating a research and development program encompassing eight research projects. The company is constrained from embarking on all projects by the number of available management scientists (40) and the budget available for R&D projects (S300,000). Further, if project 2 is selected, project 5 must also be selected (but not vice versa). Following are the resources requirement and the estimated profit for each project.
Project Expense Management Estimated Profit
($1,000s) Scientists required (1,000,000s)
1 50 6 0.30
2 105 8 0.85
3 56 9 0.20
4 45 3 0.15
5 90 7 0.50
6 80 5 0.45
7 78 8 0.55
8 60 5 0.40
Formulate the integer programming model for this problem and solve it using the computer.
Answer:
Answer
Explanation:
The Texas Consolidated Electronics Company is contemplating a research and development program encompassing eight research projects. The company is constrained from embarking on all projects by the number of available management scientists (40) and the budget available for R&D projects (S300,000). Further, if project 2 is selected, project 5 must also be selected (but not vice versa). Following are the resources requirement and the estimated profit for each project.
Project Expense Management Estimated Profit
($1,000s) Scientists required (1,000,000s)
1 50 6 0.30
2 105 8 0.85
3 56 9 0.20
4 45 3 0.15
5 90 7 0.50
6 80 5 0.45
7 78 8 0.55
8 60 5 0.40
Formulate the integer programming model for this problem and solve it using the computer.
On the first day of its fiscal year, Chin Company issued $26,200,000 of five-year, 6% bonds to finance its operations of producing and selling home improvement products. Interest is payable semiannually. The bonds were issued at a market (effective) interest rate of 7%, resulting in Chin receiving cash of $25,110,559.
a. Journalize the entries to record the following:
1. Issuance of the bonds.
2. First semiannual interest payment. The bond discount amortization is combined with the semiannual interest payment. Round your answer to the nearest dollar.
3. Second semiannual interest payment. The bond discount amortization is combined with the semiannual interest payment. Round your answer to the nearest dollar.
b. Determine the amount of the bond interest expense for the first year.
c. Explain why the company was able to issue the bonds for only $9,594,415 rather than for the face amount of $10,000,000.
Solution :
a. 1). Preparing the journal entry to record the issuance of bonds.
Date Account title Debit ($) Credit ($)
Jan 1 Cash 25,110,559
Discount on bonds payable 1,089,441
Bonds payable 26,200,000
a. 2). Preparing the journal entry to record the first semi annual interest payment.
Date Account title Debit ($) Credit ($)
Jun 30 Interest expense 390559
Discount on the bonds payable 108,945
Cash ($26,200,000 x 3%) 786,000
a.3). Preparing the journal entry to record the second semi-annually interest payment.
Date Account title Debit ($) Credit ($)
Dec 31 Interest expense 390,559
Discount on bonds payable 108,945
Cash 786,000
b). Determining the amount of bond interest expense for the 1st year.
Particulars Amount ($)
Interest expense ( 786,000 + 786,000 ) 1,572,000
Add : Discount amortized (108,945 + 108,945) 217,890
Interest expense (for the 1st year) 1,789,890
c). The company issued the bonds having face value of $26,200,000 for $25,110,559. That is the bonds are issued at a discount for $1,089,441. The bonds are issued at a discount as the market interest of the bonds are higher than the bonds coupon rate.
Consumers' Willingness to Pay Musashi: $25 Jacques: $40 Kyoko: $35 Rina: $10 Firms' Costs Firm A: $15 Firm B: $30 Firm C: $20 Firm D: $10 Each firm has the capacity to produce only one haircut. For efficiency, should be given. Which businesses should cut hair
Answer:
For efficiency, 4 haircuts should be given.
If a haircut is to be given, the cost of the haircut to a firm should be less than or equal to the willingness to pay of the customer going there.
Firm A's cost is less than Musashi's willingness to pay so Firm A can cut. Firm B's cost is less than Jacques's willingness to pay so Firm B can cut. Firm C's cost is less than Kyoko's willingness to pay so Firm C can cut. Firm D's cost is equal to Rina's willingness to pay so Firm D can cut.
That makes 4 firms that can cut therefore 4 haircuts.
The business that should cut as shown above are:
Firm AFirm B Firm C Firm D.Which statement is true?
A bank interest lower than inflation means more purchasing power.
Nominal rates are an accurate figure of purchasing power.
Real interest measures the power of the saved money
Real interest is the rate quoted in loan and deposit agreements.
Answer:
Nominal rates are an accurate figure of purchasing power.
The statement nominal rates are an accurate figure of purchasing power can be marked as true. Thus, the correct option is B). Nominal rates are an accurate figure of purchasing power.
What is nominal interest rate?Nominal interest rate refers to the interest rate before taking inflation into account. It is also refer to the interest rate on a loan that is charged without taking into account any fees or compounding of interest.
The nominal rate of interest is often used in banks to describe the interest on different loans and in the investment field as well. The higher the nominal rate, the more interest will be earned on savings.
Basically, the nominal interest rate is approximately equal to the real interest rate plus the inflation rate that can be depicts as (i = R + h).
Learn more about nominal interest rate here:-
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Decruitment is the planned elimination of ________ in an organization. A) jobs
B) managerial hierarchy C) cross-functional teams D) departments
Answer:
C) cross-functional teams
Explanation:
Human resources management (HRM) can be defined as an art of managing, controlling and improving the number of people (employees or workers), functions, activities which are being used effectively and efficiently by an organization.
Hence, human resources managers are saddled with the responsibility of recruiting, downsizing, decruiting, managing and improving the welfare and working conditions of the employees working in an organization.
A cross-functional team can be defined as a group that comprises of employees from different functional areas within an organization.
Decruitment is the planned elimination of cross-functional teams in an organization.
This ultimately implies that, decruitment is a method adopted by human resource managers to reduce the number of various employees (workforce) working in an organization.
Similarly, downsizing refers to the planned elimination of jobs (job positions) existing in an organization.
According to the basic Dividend Discount model, the value an investor should assign to a share of stock is dependent on the length of time he or she plans to hold the stock.Is the above statement True or False? Please Explain
Answer:
True
Explanation:
The above statement is true because the Dividend Discount model is based on the present value of the dividend payments that will be received over time. The longer the dividends are received, the higher the intrinsic value of the price of the stock will be when discounted to the present value. This model uses the discounted values or present values of dividends and the selling price to arrive at the stock's intrinsic value.
The Keller's discovered that they could reduce their mortgage interest rate from 10% to 4%. The value of homes in their neighborhood has been increasing at the rate of 5% annually. If the Keller's were to refinance their house with $3,000 in closing costs added to their current mortgage balance ($277,000) over a period of time which coincides with their chosen retirement age in 20 years, what would be their new monthly payment including principal and interest
Answer:
The Keller's
Their new monthly payment including principal and interest is:
= $1,817.94
Explanation:
a) Data and Calculations:
Current mortgage balance = $277,000
Closing costs for refinancing 3,000
Total mortgage balance = $300,000
Mortgage interest rate changed from 10% to 4% upon refinancing
Loan Amount 300000
Loan Term 20 years 0 months
Interest Rate 4
Compound Monthly (APR)
Pay Back Every Month
Results:
Payment Every Month $1,817.94
Total of 240 Payments $436,305.84
Total Interest $136,305.84
A firm currently produces 1000 units of output and has total costs of $15,000 and fixed cost of $3,000. What is the firm’s average variable costs?
I need help ASAP pleaseeee !!!
Explanation:
Explanation: The formula is ATC = AFC + AVC. Use this formula.
Crane Company receives a $74,000, 5-year note bearing interest of 5% (paid annually) from a customer at a time when the discount rate is 6%.
Required:
What is the present value of the note received by Crane?
Answer: $70,882.98
Explanation:
Present value of note = Present value of interest payments + Present value of face value
Present value of interest payment:
First calculate the interest:
= 5% * 74,000
= $3,700
This amount is constant so is an annuity
Present value = 3,700 * Present value interest factor of annuity, 5 years, 6%
= 3,700 * 4.2124
= $15,585.88
Present value of face value :
= 74,000 / (1 + 6%)⁵
= $55,297.10
Present value of note:
= 15,585.88 + 55,297.10
= $70,882.98
Suppose that the total value of dividends to be paid by companies in the Narnian stock market index is $100 billion. Investors expect dividends to grow over the long term by 5% annually, and they require a 10% return. Now a collapse in the economy leads investors to revise their growth estimate down to 4%. By how much should market values change
Answer:
The correct answer is "16.67%".
Explanation:
Given:
Dividend,
= $100 billion
Rate of return,
= 10%
= 0.10
Growth rate,
= 5%
= 0.05
Now,
Market value will be:
= [tex]\frac{Dividend}{Rate \ of\ return-Growth \ rate}[/tex]
= [tex]\frac{100}{0.10-0.05}[/tex]
= [tex]\frac{100}{0.05}[/tex]
= [tex]2000 \ Billion[/tex] ($)
After collapse,
The market value will be:
= [tex]\frac{100}{(.10-.04)}[/tex]
= [tex]\frac{100}{.06}[/tex]
= [tex]1666.67[/tex] ($)
Change in market value will be:
= [tex]2000-1666.67[/tex]
= [tex]333.33 \ Billion[/tex] ($)
hence,
The percentage change in market value will be:
= [tex]\frac{333.33}{2000}[/tex]
= [tex]16.67[/tex]%
Bengal Co. provides the following sales forecast for the next three months: JulyAugustSeptember Sales units 8,500 9,200 5,950 The company wants to end each month with ending finished goods inventory equal to 20% of the next month's sales. Finished goods inventory on June 30 is 1,700 units. The budgeted production units for August are:
Answer:
Production= 8,550
Explanation:
Giving the following information:
Sales units 8,500 9,200 5,950
Desired ending inventory= 20% of the next month's sales.
To calculate the production for August, we need to use the following formula:
Production= sales + desired ending inventory - beginning inventory
Production= 9,200 + (5,950*0.2) - (9,200*0.2)
Production= 9,200 + 1,190 - 1,840
Production= 8,550
what's pricing strategy
Answer:
A pricing strategy takes into account segments, ability to pay, market conditions, competitor actions, trade margins and input costs, amongst others. It is targeted at the defined customers and against competitors.
Explanation:
A business can use a variety of pricing strategies when selling a product or service. To determine the most effective pricing strategy for a company, senior executives need to first identify the company's pricing position, pricing segment, pricing capability and their competitive pricing reaction strategy
Explanation:
hope it help
plss brainlys me…thanks for the points
2. Write the importance of professional education
Answer:
The aim of education is to make a person intelligent enough to make decisions logically, knowledgeable enough to take up a right career path and skilled enough to be self-supportive.Getting a professional education is important for shaping your career to move towards a right direction.Professional education educates the new generation of professionals, expanding the frontiers of knowledge and reaching out in service to society. Professional education is increasingly being called upon to play a significant role in the administration of new programs within continuing and new structures.
Explanation:
it is in paragraph but correct and brilliant
hope it help you...!
Professional education is basically an education that focuses on getting a profession or earning money from that specific skill or talent. It is necessary because financial security is necessary, doesn't matter what we do. We can spend years following our hobies or researching the subject of our interest, but professional education ensures that we are financially secure.
The following information is available for Oriole Company
Accounts receivable $3,000 Cash $6,300
Accounts payable 4,400 Supplies 3,880
Interest payable 610 Unearned service revenue 860
Salaries and wages expense 4,700 Salaries and wages payable 890
Notes payable 32,000 Depreciation expense 760
Common stock 57,200 Equipment (net) 109,600
Inventory 2,940
Required:
Using the information above, prepare a balance sheet as of December 31, 2022.
Answer and Explanation:
The preparation of the balance sheet is presented below:
Assets Amount
Accounts receivable $3,000
Cash $6,300
Supplies $3,880
Equipment (net) $109,600
Inventory $2,940
Total assets $125,720
Liabilities and stockholder equity Amount
Accounts payable $4,400
Interest payable $610
Unearned service revenue $860
Salaries and wages payable $890
Notes payable $32,000
Common stock $57,200
Retained earning (bal figu) $29,760
Total liabilities & stockholder equity $125,720
Star Corp. has a rate of return on assets of 10% and a debt/equity ratio of 2 to 1 before entering into an operating lease as the lessee. Not including any indirect effects on earnings, when Star Corp. records the operating lease, the immediate impact on these ratios is a(an): Return on Assets Debt/Equity a. increase increase b. decrease decrease c. increase decrease d. decrease increase
Answer:
d. decrease increase
Explanation:
The formula for the return on asset is as follow
Return on Asset = Net income / Total Assets
As the asset value is increased as a result of lease entry, The return on asset ratio will decrease because there will be no change in net income.
As the debt of the company will increase
The formula for debt-equity ratio is as follow
Debt equity ratio = Total Debt / Total equity
As the debt will increase as a result of the lease and there will be no impact on the equity of the company. Hence, the debt-equity ratio will increase.
