What term describes the method of raising finance in which a firm sells an asset it owns, such as its premises or machinery, and then immediately leases that same asset back so it can continue using it?

Model answer

sale and lease back

Also accepted: sale and leaseback, sale-and-leaseback, leaseback

Explanation: Sale and lease back raises an immediate cash lump sum from selling the asset while allowing the firm to keep using it, though the firm no longer owns the asset and must make ongoing lease payments.

Derived from ZIMSEC Business_studies Paper 1, November 2018, Q15

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What term describes the method of raising finance in which a firm sells an asset it owns, such as its premises or machinery, and then immediately leases that same asset back so it can continue using it?

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