What does Leasing involve in terms of long-term debt?

Leasing, in the context of long-term debt, primarily involves renting equipment or property from another company rather than purchasing it outright. This arrangement allows businesses to utilize necessary assets—such as machinery or vehicles—without significant upfront costs, which would be associated with direct purchase.

Leasing can lead to improved cash flow since companies can preserve their capital for other investments while maintaining operational efficiency through the use of the leased assets. Furthermore, lease payments are often considered operational expenses, which can provide tax advantages.

The other options do not accurately reflect the nature of leasing. Direct purchase signifies complete ownership rather than a rental arrangement, while long-term investment in infrastructure generally refers to acquiring or developing assets rather than leasing them. Financing through stock investments focuses on equity rather than debt instruments, which are at the heart of leasing agreements. Thus, the leasing process distinctly embodies the concept of renting equipment, aligning it with the correct choice.