ENTREPRENEURIAL PLANNING
FINANCIAL PLANNING AND ANALYSIS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Which of the following is a disadvantage of leasing?
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Leasing company is responsible for repairs of the asset
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Helps to manage cash flow
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The asset might not be right for the business
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More expensive in the long-run
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Explanation:
Detailed explanation-1: -you may have to put down a deposit or make some payments in advance. it can work out to be more expensive than if you buy the assets outright. your business can be locked into inflexible medium or long-term agreements, which may be difficult to terminate.
Detailed explanation-2: -Leasing arrangement has some limitations too for the lessor. The lessor bears the risk of the asset becoming obsolete. The lessor can’t charge increased lease rentals in a situation where the market value of the asset increases. It takes a substantial time to recover the initial cost of the asset.
There is 1 question to complete.