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Air Canada Lease Case Questions -

You were hired by a potential lender to Air Canada. They ask you to conduct a full credit analysis for the company. You are provided with excerpts from Air Canada's financial report for 2012. Before conducting the credit analysis, you want to start by examining their leases. These are the things you want to look into:

1. As a first step, you want to capitalize their operating leases. Try to approximate the amount of operating leases that would be capitalized if these were capital leases.

2. Calculate the debt-to-total assets ratio before and after the capitalization.

3. Lastly, assess the effect of the capitalization on operating income and income before tax in 2013. If nothing else changes what will be the % change in income before tax in 2013?

Attachment:- Air canada Lease case.rar

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