Often, a lease agreement will include a clause which gives the lessee the ability to extend or renew the lease of an asset at below-market rates. Including this option in the agreement would require the lease classification to be that of "capital" (asset is treated as lessee's property for accounting purposes and remains on their balance sheet), rather than "operating" (payments considered as rent and thus operating expenses, with the asset not being listed on the balance sheet).
So, let's say a hole-boring machine is worth $25,000/year and the lease agreement contains a bargain renewal option. In this situation, the lessee could trigger the clause and obtain a lease on the equipment for $18,000/year. Better than a hole in the head.
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Finance: What is Bottom Fishing?26 Views
Finance a la shmoop what is bottom fishing?
I like big bull markets and I cannot lie, all you other brokers can't deny that when a fun [People rapping]
comes in with an itty bitty fee and dividends in your face you get sprung
uh-huh but then it ends alright in stocks or at least a stock goes down
down down down and you're doing the financial limbo asking how low can they [Stock performs limbo]
go well anyway the stocks die or at least get close to death their stock
prices fall fall fall and there's collection at the bottom of the sea [Stocks collect at the bottom of the sea]
fallen angels formerly great companies gone bad tech stocks that are no longer
high-tech what do they all have in common down here they're cheap they
traded five times earnings eight times earnings three times ebitda.. nobody
wants them nobody loves them they are literally eating worms well some [worms appear from sea bed]
investors hunt for extreme bargains down here hoping to find names that will
someday not be at the bottom of the sea maybe there's a shift in technology
coming that will favor them maybe there's a sentiment change or maybe
Sears starts a serving starburst flavored coffee and the throngs of [Sears advert for starburst coffee appears on TV]
sticky-fingered kids come running back to malls leaving their videogame
joysticks back home at least that's the hope of bottom fisher's like this type
of investor who eventually wants to make the names down here float with the [Investor scubadiving at bottom of the sea]
belief that something's coming just around the corner and it will make them
not trade at a crazy low multiple otherwise the graveyard down here is
just forever cheap [Seabed stamped forever cheap]
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