[Verse 1] Two companies sign the same lease deal One calls it operating, one says it's real The classification makes a world of change Watch how the balance sheets rearrange Operating keeps it off the books so clean No asset, no liability seen But finance leases tell a different tale Assets and debts upon the scale [Chorus] Finance on, operating off Balance sheet treatment shows who's soft Debt-to-equity climbing high When finance leases multiply ROA goes down, the ratios shift Operating gives your metrics lift Remember this accounting gift Classification makes the drift [Verse 2] Operating lease expense flows straight Through income in one steady rate But finance splits the payment two Interest expense and principal due Depreciation hits the books as well Making early profits fell Front-loaded costs in finance style Operating smooths it all the while [Chorus] Finance on, operating off Balance sheet treatment shows who's soft Debt-to-equity climbing high When finance leases multiply ROA goes down, the ratios shift Operating gives your metrics lift Remember this accounting gift Classification makes the drift [Bridge] Current ratio feels the squeeze When finance brings liabilities Asset turnover takes a hit More assets in the benefit Cash flow from ops looks better too When finance payments split in two Only interest hits that line Principal stays behind [Verse 3] Analysts must look beneath The surface where the truth lies neat Add back operating leases To compare what each releases Debt-adjusted ratios tell The story that the books won't spell Constructive capitalization Levels the comparison [Chorus] Finance on, operating off Balance sheet treatment shows who's soft Debt-to-equity climbing high When finance leases multiply ROA goes down, the ratios shift Operating gives your metrics lift Remember this accounting gift Classification makes the drift [Outro] Same cash flows, different view Classification changes you Ratios dance to lease design Read between the bottom line
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