Assessing the Efficiency of Leasing Operations in the Case of an Annuity Scheme for Calculating Leasing Payments

Abstract

The article proposes a method for assessing the efficiency of leasing operations in the case of an annuity scheme for calculating leasing payments, which is based on comparing leasing with loan that is close in terms of economic essence to the method of financing real investments. This approach is often used by leasing companies and other participants in the leasing market in the United States when assessing the efficiency of leasing agreements. In the development of mathematical instrumentarium, the authors took into account the peculiarities of taxation and the functioning of all parties to leasing contracts in Ukraine and the current legislative and other regulatory documents in this area. This approach to assessing the efficiency of a leasing agreement is based on the fact that two cash flows, payments on which occur at different points in time, will be considered equivalent if their current values (or accrued amounts) calculated at the same discount rates turn out to be equal. In determining the discounted value of cash flows under the leasing agreement, it was taken into account that leasing payments, in addition to the minimum rental payments, also include the cost of services payable to the lessor, taxes and unforeseen leasing payments. Thus, if the present value of the company’s cash flows during leasing is greater than the present value of the cash flows of the same enterprise taking a loan, then it can be stated that the purchase of equipment through credit borrowings will be more profitable for the enterprise. Conversely, if the present value of the company’s cash flows during leasing is less than the present value of the cash flows of the same enterprise taking a loan, then the cost of equipment obtained through leasing will be lower compared to the purchase through loaning, and therefore it is more expedient for the enterprise to stick with the leasing agreement.

Keywords

• efficiency of leasing operations
• sfa models
• leasing
• leasing companies
• lessor
• leasing payment