Operating leases can inflate both return on investment and asset turnover ratios.

Name: Operating leases can inflate both return on investment and asset turnover ratios.
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Question

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Operating leases involve renting assets rather than owning them, which can result in higher return on investment (ROI) and asset turnover ratios because the leased assets do not appear on the balance sheet as liabilities, thus inflating the ratios.

Operating Leases Can Inflate Both Return on Investment and Asset