gp.0 Define leverage ratio as ending debt divided by ending total assets, and debt as the sum of non-operating liabilities. The leverage ratio as reported by Rent-A-Center in 2021 was 0.326calculated as follows (numbers are inclusive of operating lease assets and liabilities):Total AssetsTotal DebtLeverage Ratio2,993,3271,867,7340.624Using the present value of operating leases disclosed by the firm of $296,535, calculate what thedebt ratio would have been had the new accounting rules not been adopted. Assume thereported operating lease liability equals the reported right-of-use asset amount. Hint, the numberwill be less than 0.624 and somewhere between 0.5 and 0.6.

In the accounting context, leverage is used to obtain a return on investment, purchase new products,…

Answered: debt ratio would have been had the new…

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter7: Financial Activities

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9781285190907

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