Terry, Brian J. (1977) The leasing industry and the role and evaluation of leasing in corporate financing strategies. PhD thesis, University of Warwick.

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Abstract

The U.K. capital market has observed a remarkable growth in
the use of lease financing as a tool of financial management. It
must be recognised, however, that its profitable use by Industry
is dependent upon an easily applicable and theoretically
acceptable method of evaluation within corporate capital budgeting
procedures.
Increasingly, analysts have come to acknowledge the need to
integrate corporate investment and financing decisions insofar as
concerns the acquisition of industrial plant and equipment.
However, traditional methods of lease evaluation fail to examine
its integrative nature, and in consequence, they
neglect the
critical interdependencies which encompass the simultaneous
decision process.
Extant lease evaluation models also fail to consider the
consequences of the earnings generated by the "Residual Capital
Balances". That is, the working capital freed when leasing is
strategically used to relax what otherwise would be an
unacceptable shortage of funds. Such earnings are a
fundamental part of an integrated lease cash-flow profile under
certain circumstances: namely, the use of leasing as part of a
"Planned Financing Mix", as opposed to its use as an emergency
or "spill-over" financing when no residual capital occurs.
On the basis of extensive empirical study into the circumstances
under which U.K. financial management had recourse to leasing,
a hypothesis was developed to explain the role of leasing in corporate financial planning and debt management. The research
proceeds to establish models for the evaluation of leasing under
"spill-over" conditions (where all otherwise available sources
of finance are, or appear to be, exhausted) and "Planned
Financing" conditions (when the use of leasing in quantitative
terns is formally envisaged as part of the corporate financing
policy). In this way it is possible to determine the risks
implicit in the haphazard use of leasing together with the
benefits available to its planned use.

Item Type:	Thesis (PhD)
Subjects:	H Social Sciences > HF Commerce H Social Sciences > HG Finance
Library of Congress Subject Headings (LCSH):	Leases -- Economic aspects, Lease or buy decisions, Corporations -- Finance
Official Date:	March 1977
Dates:	Date Event March 1977 Submitted
Institution:	University of Warwick
Theses Department:	School of Industrial and Business Studies
Thesis Type:	PhD
Publication Status:	Unpublished
Supervisor(s)/Advisor:	Fawthrop, Roger A.
Sponsors:	Bank of England
Extent:	562 leaves
Language:	eng

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