1-40%, 83%, 50%, 100%

2-Increase or Decrease .... 42%, 70%, 117%, 58%

3-Remain unchanged, Increase, Decrease

4-Less or More

5-The same or More

To consider the financial statement effects of leasing versus purchasing an asset, review the following case of Hack Wellington Company Hack Wellington Company needs equipment that will cost the company $300. Hack Wellington Company is considering to either purchase the equipment by borrowing $300 from a local bank or leasing the equipment. Assume that the lease will be structured as an operating lease. Some data from Hack Wellington Company's current balance sheet prior to the lease or purchase of the equipment are: Balance Sheet Data (Dollars) Current assets $900 Debt $750 Net fixed assets 600 Equity 750 Total assets $1,500 Total claims $1,500 1. The company's current debt ratio is 2. If the company purchases the equipment by taking a loan, the total debt in the balance sheet will and the debt ratio will change to 3. If the company leases the equipment, the company's debt ratio will because the lease is not capitalized. 4. In this case, the company's financial risk will be under a lease agreement as compared to the hinancial risk in purchasing the equipment by taking a loan 5. However, if the lease is capitalized, the financial risk under the lease agreement will be as compared to the risk in buying the equipment