Thursday, March 21, 2019
Tech Data’s Goodwill Adjustment

Tuesday, March 19, 2019
There’s Taxes, and There’s Taxes

Saturday, March 16, 2019
Adventures in Tax Cuts and Net Income

Monday, March 11, 2019
Big Moves in Goodwill, Intangible Value

Friday, March 8, 2019
CVS, Goodwill, and Enterprise Value

Thursday, February 28, 2019
Summary of Our Goodwill Research/ How-To

Wednesday, February 27, 2019
What Does ‘Other’ Mean? An Example

Thursday, February 21, 2019
Another Tale, Buried in the Footnotes

Wednesday, February 13, 2019
Low Latency Calcbench

Monday, February 11, 2019
Now Streaming on Hulu: Red Ink

Thursday, February 7, 2019
Early Look at 2018 Tax Decline

Wednesday, February 6, 2019
You Revised WHAT, Netflix?

Thursday, January 31, 2019
Talking About Huawei Exposure

Wednesday, January 30, 2019
Another Discrepancy in Reported Numbers

Wednesday, January 30, 2019
Finding Revised Facts: Hertz Edition

Wednesday, January 23, 2019
GE Commercial Aviation Services: Bringing Numbers to Light

Monday, January 21, 2019
Differences in Earnings Releases and 10-Ks

Wednesday, January 16, 2019
The Importance of Textual Analysis

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

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

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Early Look at 2017 Leasing Costs
Tuesday, January 16, 2018

Already we have written several times this year about the new accounting standard for operating leases that will go into effect at the end of this year — and the upheaval it could bring to many balance sheets, as companies suddenly start reporting their lease costs there.

So we decided to review companies that have already filed their Form 10-K reports for 2017, and see what their leasing costs are relative to total liabilities.

We found 36 companies, from Accenture and Apple to West Rock and Whole Foods, that have already filed 2017 reports and included leasing information. We examined “minimum future payments due.” That’s the amount these companies must pay, no matter what, because they’ve already assumed the lease liability. (They could always sign more leases in the future, too.)

Then we compared those lease liabilities, which are currently kept off the balance sheet, to total liabilities listed on the balance sheet. Which companies had the highest ratio? That is, which ones have gobs of operating lease liabilities, that might even exceed all other liabilities currently reported on the balance sheet?

The top 10, ranked by largest ratio, were as follows:

No surprise that retailers like Whole Foods, Starbucks, and Walgreens top the list; their commercial real estate needs are considerable.

We should also note that while Whole Foods tops this list, and the ratio rapidly declines from there (21 of the 26 companies we examined had ratios below 4 percent) — analysts should expect many more companies closer to Whole Foods’ situation in the future, as more 2017 reports arrive.

Calcbench has been keeping a close eye on operating leases for a while. In the more in-depth report we published last summer, we found numerous fast food chains, retailers, and related businesses whose operating leases exceeded total liabilities.

Calcbench subscribers can do your own quick-and-dirty research on our Multi-Company page. Just select the group of companies you want to research, and then look at that “Themes” pull-down menu on the right-hand side of the screen above the results. One of the menu options is “Operating Leases.”

Select that, and see what comes up: data!

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