Which concept refers to the selling of an asset to a lessor with a subsequent lease-back?

The concept that refers to the selling of an asset to a lessor with a subsequent lease-back is commonly known as sale and lease-back. This financial arrangement allows a company to improve its cash flow by converting an owned asset into cash through its sale, while still retaining the right to use the asset by leasing it back.

In practice, a firm sells an asset (like equipment or property) on its balance sheet and receives immediate cash from the sale. Then, it enters into a lease agreement for the same asset, which enables the firm to continue to use the asset in its operations without the burden of ownership. This approach can be particularly beneficial for companies that need liquidity or want to relieve themselves of maintenance responsibilities associated with asset ownership.

Other terms provided do not accurately describe this specific arrangement. Asset financing generally refers to securing loans or credit based on the future cash flows generated by an asset. Capital expenditure relates to funds used by a company to acquire or upgrade physical assets, and operational leasing refers to renting an asset without the intention of ownership. Each of these concepts involves different financial strategies and implications, distinguishing them from the sale and lease-back arrangement.