Discuss the Concerns Raised by Users Regarding Essay Example

ers in assessing the true financial condition and risk of companies. This can adversely affect debt-equity ratios and result in faulty decisions being made by financial analysts. Therefore, the information provided in the notes to the financial statement is inadequate for users to make reliable adjustments to recognised amounts.

Although some companies may structure lease agreements as operating leases to avoid negative impacts on financial ratios, not all do so intentionally. Operating leases offer various economic benefits, such as providing access to capital that may not be available by other means. This is especially useful for companies who wish to avoid lease capitalization.