Compare the Effects of Operating Leases as Compared to Capitalized $\text { Levered } R O A=\frac{N I}{\text { Average Total Assets }}$

Compare the effects of operating leases as compared to capitalized leases, in the first year of a lease, on the following items listed. Explain your answer.
1. EBIT
2. Net income
3. Return on assets (levered)
$\text { Levered } R O A=\frac{N I}{\text { Average Total Assets }}$

4. Cash flow from operations
5. Current ratio

Correct Answer:

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1. EBIT
Operating leases deduct t...

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