Purpose: The purpose of this paper is to examine the relationship between leasing and debt and how it functions in different corporations.
Theoretical frame of reference: The theoretical frame of reference that we used for this paper are all theories that refers to leasing as a financial method.
Methodology: The method used is a quantitative method based on the survey performed. The survey is based on a equation from the earlier study “The leasing puzzle”.
Empirical foundation: We use financial statements from different companies to get the right numbers for the equation. The respondents in the survey is airplane and car companies in Europe.
Conclusions: The results shows that leasing can both function as a substitute and as a complement to the companies, where it functions as a substitute the majority of the time. How leasing behaves depends on the company’s debt ratio that do lease and the company’s debt ratio that do not lease. Other factors that can affect the behaviour of leasing can be the company’s size, expected growth and liquidity.