Lease Payments
Lease is an agreement
granting use or occupation of property for the period of a specified time in
exchange for a particular charge or payment. This rent or charge is paid in
either annuity or in any other forms as per agreement between both of the
parties. This payment is called as lease payments. The amount of lease payment
mostly depends on the lease agreement and it varies from company to company.
Importance of lease payments
Lease payment is
particularly not that important for organizations rather lease agreement and
making the right use of lease is more important. The main goal of taking lease
is to get some advantages over buying that property. So, the payment amount
should be congenial to the organization. Lease payments are also taken
into account in the computation of the fixed-charge coverage ratio. This
ratio aids investors observe if a corporation can face its fixed expenses, for
instance leases and interest.
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