operating lease dosent have any impact on balance sheet items.
while capital lease creates short term liability( portion of lease payable within 1 year), besdies asset and long term liability. so current liabilities go up.
Working capital=current asset - currentliabilities.
so increase in current liability of company with capital lease lowers working capital. hence working capital is higher for a company using operating leases instead of capital leases.
Edited 1 time(s). Last edit at Tuesday, April 18, 2006 at 10:10AM by financegal.