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This paper aims to analyse the corporate rent-vs-buy decision on real estate through the trade-off theory and default option in the framework of a corporation that aims to optimise its capital structure.

The methodological core of this paper comprises the trade-off theory that approaches the optimal capital structure by counterbalancing debt tax savings with bankruptcy costs. Impacts on the default option and the default barrier are made explicit. The paper also explores the practical applicability of the renting scenarios in the European context by examining the regimes of real estate investment trusts in different countries from the demand-side of commercial renting.

Analytical relationships with tax savings, bankruptcy costs, default option and default barrier are identified for the renting-vs-buying real estate decisions.

The theoretical model assumes simplifications, such as constant debt, to make it operational. The paper centres exclusively on the trade-off capital structure theory.

This paper is an analysis of corporate real estate decisions together with capital structure. Applications are not only quantitative but also conceptual and strategic.

Identifying the main variables that govern the impact of corporate real estate decisions on capital structure and interweaving different approaches generates a conceptual framework that enlightens strategic thinking in this field.

The purpose of this paper is to extend the Du Pont method by connecting productivity and profitability through financial statements focusing on the two most common productivity indicators for companies: total factor productivity (TFP) and labour productivity.

The first part of the paper uses a deductive approach to obtain a new productivity rate of return. The second part applies the methodology of financial statements analysis to develop an empirical application of the findings.

The main finding is a functional relationship among the return on operating assets (ROOA), TFP and labour productivity. From it, the paper obtains a productivity rate of return that synthesizes both productivity measures. The ROOA is broken down into the sum of three parts: productivity, price change, and a crossed effect between turnover and price change.

The model developed in this paper enables analysts and managers to deepen in the causes of margin and turnover and, thus, in the causes of ROOA. To the extent that the separation between productivity and price change effects adds clarity to the knowledge of the causes of ROOA, it creates, at the same time a basis for making more precise decisions in order to improve corporate performance.

This paper differs from other studies by presenting the return of operating assets as a variable that depends on productivity ratios. Financial statement analysis has only occasionally incorporated productivity measures among the variables regarded as the drivers of a companys economic performance.