Consider this quotation from the famous American industrialist and one-time richest man in the world, John Paul Getty:
“Buy what appreciates, lease what depreciates.”
Houses, art, land and stocks and shares are typical examples of assets that appreciate. OK, they can all go down in price from time to time but the point is they generally rise in value. Motor cars, machinery and IT equipment all go down in value over time as they are used.
If you pay cash for waste compactor, you own it but you no longer have the cash. What’s more, the value of what you bought is dropping, from the moment you take delivery. Add to that the fact that you can only take 25% of the value as a cost each year when it has made a 100% dent in your cash flow. As all good businessmen know, even the best businesses fail when they run out of cash.