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Leases:  A Primer
Thursday, February 19, 2015

Last week we began our series of Analysis Guides with a piece on Analyzing Tax Disclosures in financial statements.  This week we continued it with a Lease Template example.  This post is a meant to serve as a primer on what our customers can do with the lease template.  

First, get one of our templates by downloading it from  

https://www.calcbench.com/home/guides

Enable the macros and connect to Calcbench.

Next (assuming you pick the lease template), select a firm by putting the symbol into the cell B3.  You can also change the year in B4 and the Assumed Interest Rate in B5.  

Once you have done the above, you will see that the Present Value of Lease Liabilities (PVLL) is calculated on an annual basis for you.  In addition you will get the Interest Expense, Depreciation and Tax Deduction calculated.  On the far right in cell I20, you will get the estimated amount that would be placed onto the liabilities side of the balance sheet.  

We also provide you with our Lease Ratio, which simply takes the PVLL and divides it by Current Liabilities and Total Liabilities.  Finally, we estimate the PPE increase that is implied if Shareholders Equity were to stay constant for the firm in question. 

Since, we are data scientists, we decided to build a macro based on our template and run this spreadsheet for the S&P 500 constituents for 2013 and 2014.  The graph below shows the change in lease Liabilities on a year over year basis for firms that have reported both 2014 and 2013 results so far (through today, 2/19/15).   You might interpret increases in Lease Liabilities as confidence, or perhaps not.  

Also attached are the Implied Lease years for each of the firms.  This is an imputed, or estimated, number based on the dollar amounts beyond the standard 5 year lease reporting period and current leasing behavior.  As you see, Whole Foods, Costco and Chipotle report the most dollars committed to the future.  

This is just the start of things that we are doing.  Call us for more.  us@calcbench.com

Family Dollar is the biggest YoY increase (percentage wise) and this is before the Dollar tree merger!

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Implied Lease Years.  E.G. Whole Foods at over 17 years  (first 5 reported + 12 implied)!  #Confident.

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