RECENT POSTS
Wednesday, August 21, 2019
WeWork Liabilities, Part II

Tuesday, August 20, 2019
WeWork’s Liabilities in Perspective

Wednesday, August 14, 2019
Comparing LinkedIn, Twitter Revenue

Wednesday, August 7, 2019
Leasing’s Effect on Retail Balance Sheets

Thursday, August 1, 2019
Using Calcbench to Find China Exposure

Tuesday, July 30, 2019
Leasing Details: The Comcast Example

Monday, July 29, 2019
Easy Fundamental Equity Analysis in Python

Monday, July 22, 2019
Calcbench Data and Tax Reform Insight

Wednesday, July 17, 2019
Downshifting in the Trucking World

Tuesday, July 16, 2019
New Report: Adoption of New Lease Accounting Standard

Friday, July 5, 2019
More Consequences of Lease Accounting

Monday, July 1, 2019
Another Example of Tax Reform Twisting Bottom Line

Thursday, June 27, 2019
The Latest Share Repurchase Data

Tuesday, June 18, 2019
Popping the Lid on Smuckers’ Goodwill

Tuesday, June 11, 2019
Not Much Fizz in LaCroix Right Now

Wednesday, May 29, 2019
An Example of Calcbench, Excel, and Insight

Monday, May 20, 2019
Research Paper: Capex Spending

Thursday, May 16, 2019
Psst: Got Any Weed?

Wednesday, May 15, 2019
Open Letter: SEC Proposed Rule for BDCs

Friday, May 10, 2019
General Motors and Workhorse

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.