What are Leasehold Improvements?

Leasing decision is to use the basic technology of long-term investment decision-making to analyze the feasibility of leasing. On this basis, determine the financing plan, determine the content of the project contract, and take measures to ensure the realization of the contract and protect the parties' own legal rights.

Lease decision

Leasing decision is to use

What is a lease decision

The role of leasing decision is to determine, for a specific project, whether equipment should be added and which method of financing; under different conditions, the length of different methods is analyzed, and comprehensive, thoughtful and correct economic benefits Analyze and make the best choice.

Leasing decisions are related to the long-term development of the enterprise and must not be rushed. The success of a decision depends largely on whether the company has the necessary prerequisites. In summary, there are the following:

There are many influencing factors on leasing decisions. To analyze and summarize these factors, there are generally the following:

The long-term economic decision-making of an enterprise must solve two problems: first, which investment is the most beneficial; and second, how to raise the funds needed for the investment.

That is, people usually divide long-term decisions into two parts: investment decisions and financing decisions. The investment decision is to choose the best investment scheme or combination, and the financing decision is to choose the best funding source or combination of sources. These two decisions can be made separately, so when judging the attractiveness of various programs, we must pay attention to uniformly taking their economic benefits as the criterion. Other factors, such as where the funds come from, when they are obtained, and when they are repaid, should be ignored for the time being, and left to the analysis of funding decisions.

In reality and practice, people realize that leasing integrates "financing" and "melting" into one, which is inseparable. And in leasing decisions, people gradually feel that it is really difficult to reach satisfactory conclusions if the investment decision is to be separated from the financing decision.

For example, leasing decisions are treated as pure investment decisions, which means that leasing is only considered as a way to obtain long-term asset use rights. This is clearly inconsistent with the objective fact that leasing is also a financing channel, and the conclusions obtained through analysis are hardly convincing. Similarly, when leasing decisions are viewed as pure funding decisions, investment decisions should be made before then. Then when deciding on the optimal investment plan, many factors related to leasing cannot be taken into account, and even in the early stages of the decision, the investment plan with higher economic benefits that can be carried out through leasing may be mistakenly abandoned. For example, among the fastest-growing computer leasing in the leasing industry today, leasing companies leasing computers can provide cheap and comprehensive services to tenants, such as installing, designing software, repairing, etc. These advantages are one of the reasons for its rapid development. If you ignore it unintentionally, you will inevitably make the wrong decision.

Generally speaking, it is reasonable for us to regard the leasing decision as a mixture of investment decision and financing decision, and we cannot regard it as a single party. Therefore, the leasing decision must be resolved at the same time: whether to add a long-term asset; what kind of transaction method or financing channel to use. However, it should not be too absolute in specific applications. Sometimes, after a feasibility study, an enterprise has decided to adopt an investment project, but it is temporarily troubled by the shortage of funds, or it is urgent to find a financing channel with favorable conditions and convenient procedures. At this time, the lease decision is a financing decision. Due to the influence of the time value of money, both decisions should use dynamic indicators to measure the effectiveness of various options. But there are differences between the two types of decision-making. The investment decision is to measure the profit level of each scheme, so it is not only concerned with cash outflows, but also cash inflows. The measurement indicators used are mainly the net present value and the internal rate of return. Financing decisions are to measure the level of financing costs. The only concern is the various cash outflows. The measurement index used is mainly the actual interest rate, or the total present value of various cash outflows.