Sale and Lease Back 🔄

Concept: A company owns an asset (e.g., Head Office building) but is short of cash. It sells the asset to a Leasing Company and immediately leases it back.

Result:

1. Ownership: Transfers to Leasing Company.
2. Possession: Remains with the Company (User).
3. Cash: Company gets huge lump sum cash (Sale Price).
4. Payment: Company starts paying monthly rentals.

Why do it? 🤔

1. Unlock Liquidity: Converts fixed asset into liquid cash.
2. Tax Planning: Lease rentals are tax-deductible (might be better than depreciation).
3. Balance Sheet: Removes asset from Balance Sheet (Off-Balance Sheet financing), improving ratios like ROA.

Example: Many retailers (like Big Bazaar/Shoppers Stop) sell their mall properties to investors and rent them back to free up capital for expansion.

Quiz Time! 🎯

💡 Final Wisdom: "It's like selling your house to get cash, but living in it as a tenant. You get the money AND the roof!" 🏠💰

Next up: Bill Discounting - Short term finance! 💵