A financial manager at a manufacturing firm faces a dilemma regarding whether to buy or lease a crucial asset. While buying offers long$-$term ownership and potential tax benefits, it requires a significant upfront investment that could strain cash flow. On the other hand, leasing provides flexibility with lower initial costs and maintenance responsibilities but may incur higher overall expenses over time. The manager must carefully weigh the financial implications, considering factors such as the company's financial health, cash flow projections, and strategic objectives. Additionally, they must assess the impact on financial ratios, balance sheet leverage, and future capital allocation. Balancing short$-$term affordability with long$-$term value creation is paramount in resolving this dilemma and making an informed decision that aligns with the company's goals and financial sustainability.

Required:

In the context of this case, explain under what circumstances a company decides to go for either leasing or buying. $(15$ marks$)$