RECENT POSTS
Tuesday, January 8, 2019
A Look at Climate Change Disclosures

Wednesday, January 2, 2019
Quants: Point-in-Time Data for Backtesting

Friday, December 28, 2018
Now Showing: Controls & Procedures

Thursday, December 27, 2018
A Reminder on Non-GAAP Reporting Rules

Monday, December 17, 2018
Researching PG&E’s Wildfire Risk

Wednesday, December 12, 2018
Tracking Brexit Disclosures

Thursday, December 6, 2018
Campbell Soup: Looking Behind the Label

Sunday, December 2, 2018
SEC Comment Letters: The Amazon Example

Wednesday, November 28, 2018
Measuring Big Pharma’s Chemical Dependency

Monday, November 26, 2018
Analysts, Can You Relate? A True Story

Monday, November 19, 2018
Digging Up Historical Trend Data: Quest Example

Sunday, November 11, 2018
Cost of Revenue, SG&A: Q3 Update

Monday, November 5, 2018
Lease Accounting: FedEx vs. UPS

Saturday, November 3, 2018
New Email Alerting Powers

Wednesday, October 31, 2018
PTC and Two Tales of Revenue

Tuesday, October 30, 2018
10-K/Q Section Text Change Detection

Sunday, October 28, 2018
Finding Purchase Price Allocation

Sunday, October 21, 2018
Charting Netflix Growth in Three Ways

Wednesday, October 17, 2018
Interesting Data on Interest Income

Thursday, October 11, 2018
The Decline of Sears in Three Charts

Archive  |  Search:

One of the most enlightening aspects of financial statement analysis is in examining the footnotes of firms.  Calcbench set out to systematically analyze the off-balance sheet debt of US firms by first looking at the commitments that these firms have made in their leasing obligations (report here) .  What we found was eye-opening.  

First, the idea that a firm will lease assets is nothing more than a financing decision.  A lease gives the lessee, the right to use an asset (e.g.  store, computer or vehicle) for a specified term and expense.  Since the lessee does not assume the risk of ownership, the lease does not have to be put onto the balance sheet.  In many cases, this simple action may distort the assets and liabilities of the underlying firm.  

So we asked a few simple questions.

1.  What would balance sheets look like if operating leases were put back onto the balance sheet?

2.  Which firms / sectors will be most effected?

3.  How have these obligations changed over time?


Our results are summarized in the Operating Lease Report on our website.  Please download it and have a look for yourself.  

But, here are some highlights. Retail trade and Manufacturing have the largest estimated liabilities in the S&P500.  This is not unexpected as they have large property, plant and equipment obligations.

What was surprising to us was in the firm level observations.  It appears that in several cases in the retail sector, the off-balance sheet lease obligations are of significant size.  In a few cases, they are 1 or 2 times the size of the 2014 Total Liabilities of the firm!  In over 50 specific firms off balance sheet operating leases represent more than 15% of the outstanding liabilities!!

All of this would not be possible without extensible Business Reporting Language (XBRL).  


FREE Calcbench Premium
Two Week Trial

Research Financial & Accounting Data Like Never Before. More features and try our Excel add-in. Sign up now to try the Premium Suite.