For the lessee during the later years of a financ

Ans:B.
In the later years of a finance lease, the net profit (margin) will be greater than the net profit (margin) reported with an operating lease.Although rent expense is normally constant throughout the term of an operating lease, interest expense declines in a finance lease as the lease obligation is reduced while depreciation expense remains constant.This leads to lower total expenses in the later years of a finance lease versus an operating lease and a higher reported net profit (margin).
A is incorrect.Through the passage of time, the lease obligation with a finance lease is reduced leading to a lower debt-to-equity ratio compared to the early years.
C is incorrect.Although the asset turnover ratio rises over time as the leased asset is depreciated with a finance lease, the asset turnover remains higher with an operating lease since the leased asset is never recorded with an operating lease.