Compared to an operating lease all other things b

Ans:C.
Lease capitalization will increase asset balances resulting in a lower asset turnover (net sales / average total assets). As the leased asset is depreciated and the asset balance becomes smaller, the ratio will increase. The lower the asset balance is (or becomes), the higher the asset turnover ratio will be.
A is incorrect. The interest coverage ratio increases over the lease term of a finance lease as the interest on the lease liability declines as the principal is paid down. On the other hand, the interest coverage ratio will be higher at all times with an operating lease as there is no interest.
B is incorrect. With a finance lease, the return on assets will increase as the earnings increase due to the lower interest expense on the lease liability and the declining asset base resulting from depreciation. Consequently, later in the lease term, higher earnings will be returns to lower asset levels and the asset turnover ratio will increase, not decrease.