.Analysis of Operating Leases
Difficulty: Advanced
An operating lease is treated like a rental contract. Neither the leased asset nor the associated liability is reported on the lessee statement of financial position, but the rights may be very similar to the rights of an owner. The lessee only records the lease payments as a rental expense in income statement.
Present Value of Future Operating Lease Payments
Coca-Cola Co., future operating lease payments
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| | Total undiscounted future operating lease payments1 (USD $ in millions) | |||||
| | Discount rate2 | % | % | % | % | % |
| | Total present value of future operating lease payments (USD $ in millions) | |||||
1 Source: Coca-Cola Co. Annual Reports
2 Weighted-average interest rate for Coca-Cola Co.'s debt
| Year | Future operating lease payments (as reported)1 | Year | Future operating lease payments (estimated) | Present value at % |
|---|---|---|---|---|
| 2018 | 2018 | |||
| 2019 | 2019 | |||
| 2020 | 2020 | |||
| 2021 | 2021 | |||
| 2022 | 2022 | |||
| 2023 and thereafter | 2023 | |||
| 2024 | ||||
| 2025 | ||||
| Total: |
1 Source: Coca-Cola Co. Annual Reports
| Year | Future operating lease payments (as reported)1 | Year | Future operating lease payments (estimated) | Present value at % |
|---|---|---|---|---|
| 2017 | 2017 | |||
| 2018 | 2018 | |||
| 2019 | 2019 | |||
| 2020 | 2020 | |||
| 2021 | 2021 | |||
| 2022 and thereafter | 2022 | |||
| 2023 | ||||
| 2024 | ||||
| 2025 | ||||
| Total: |
1 Source: Coca-Cola Co. Annual Reports
| Year | Future operating lease payments (as reported)1 | Year | Future operating lease payments (estimated) | Present value at % |
|---|---|---|---|---|
| 2016 | 2016 | |||
| 2017 | 2017 | |||
| 2018 | 2018 | |||
| 2019 | 2019 | |||
| 2020 | 2020 | |||
| 2021 and thereafter | 2021 | |||
| 2022 | ||||
| 2023 | ||||
| 2024 | ||||
| Total: |
1 Source: Coca-Cola Co. Annual Reports
| Year | Future operating lease payments (as reported)1 | Year | Future operating lease payments (estimated) | Present value at % |
|---|---|---|---|---|
| 2015 | 2015 | |||
| 2016 | 2016 | |||
| 2017 | 2017 | |||
| 2018 | 2018 | |||
| 2019 | 2019 | |||
| 2020 and thereafter | 2020 | |||
| 2021 | ||||
| 2022 | ||||
| 2023 | ||||
| Total: |
1 Source: Coca-Cola Co. Annual Reports
| Year | Future operating lease payments (as reported)1 | Year | Future operating lease payments (estimated) | Present value at % |
|---|---|---|---|---|
| 2014 | 2014 | |||
| 2015 | 2015 | |||
| 2016 | 2016 | |||
| 2017 | 2017 | |||
| 2018 | 2018 | |||
| 2019 and thereafter | 2019 | |||
| 2020 | ||||
| 2021 | ||||
| 2022 | ||||
| Total: |
1 Source: Coca-Cola Co. Annual Reports
Analyst Adjustments for Operating Leases
Coca-Cola Co., adjustments to financial data
USD $ in millions
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| Adjustment to Total Assets | ||||||
| | Total assets (as reported) | |||||
| | Add: Operating leased assets1 | |||||
| | Total assets (adjusted) | |||||
| Adjustment to Total Debt | ||||||
| | Total debt (as reported) | |||||
| | Add: Operating lease obligations2 | |||||
| | Total debt (adjusted) | |||||
1, 2 Equal to total present value of future operating lease payments. See Details »
Adjusted Ratios for Operating Leases (Summary)
Coca-Cola Co., adjusted ratios
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| Total Asset Turnover1 | ||||||
| | Reported total asset turnover | |||||
| | Adjusted total asset turnover | |||||
| Debt to Equity2 | ||||||
| | Reported debt to equity | |||||
| | Adjusted debt to equity | |||||
| Return on Assets3 (ROA) | ||||||
| | Reported ROA | % | % | % | % | % |
| | Adjusted ROA | % | % | % | % | % |
| Ratio | Description | The company |
|---|---|---|
| Adjusted total asset turnover | An activity ratio calculated as total revenue divided by adjusted total assets. | Coca-Cola Co.'s adjusted total asset turnover deteriorated from 2015 to 2016 and from 2016 to 2017. |
| Adjusted debt-to-equity | A solvency ratio calculated as adjusted total debt divided by total shareholders' equity. | Coca-Cola Co.'s adjusted debt-to-equity deteriorated from 2015 to 2016 and from 2016 to 2017. |
| Adjusted ROA | A profitability ratio calculated as net income divided by adjusted total assets. | Coca-Cola Co.'s adjusted ROA deteriorated from 2015 to 2016 and from 2016 to 2017. |
Adjusted Total Asset Turnover
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| As Reported | ||||||
| | Net operating revenues (USD $ in millions) | |||||
| | Total assets (USD $ in millions) | |||||
| | Total asset turnover1 | |||||
| Adjusted for Operating Leases | ||||||
| | Net operating revenues (USD $ in millions) | |||||
| | Adjusted total assets (USD $ in millions) | |||||
| | Adjusted total asset turnover2 | |||||
2017 Calculations
1 Total asset turnover = Net operating revenues ÷ Total assets
= ÷ =
2 Adjusted total asset turnover = Net operating revenues ÷ Adjusted total assets
= ÷ =
| Ratio | Description | The company |
|---|---|---|
| Adjusted total asset turnover | An activity ratio calculated as total revenue divided by adjusted total assets. | Coca-Cola Co.'s adjusted total asset turnover deteriorated from 2015 to 2016 and from 2016 to 2017. |
Adjusted Debt to Equity
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| As Reported | ||||||
| | Total debt (USD $ in millions) | |||||
| | Equity attributable to shareowners of The Coca-Cola Company (USD $ in millions) | |||||
| | Debt to equity1 | |||||
| Adjusted for Operating Leases | ||||||
| | Adjusted total debt (USD $ in millions) | |||||
| | Equity attributable to shareowners of The Coca-Cola Company (USD $ in millions) | |||||
| | Adjusted debt to equity2 | |||||
2017 Calculations
1 Debt to equity = Total debt ÷ Equity attributable to shareowners of The Coca-Cola Company
= ÷ =
2 Adjusted debt to equity = Adjusted total debt ÷ Equity attributable to shareowners of The Coca-Cola Company
= ÷ =
| Ratio | Description | The company |
|---|---|---|
| Adjusted debt-to-equity | A solvency ratio calculated as adjusted total debt divided by total shareholders' equity. | Coca-Cola Co.'s adjusted debt-to-equity deteriorated from 2015 to 2016 and from 2016 to 2017. |
Adjusted Return on Assets (ROA)
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| As Reported | ||||||
| | Net income attributable to shareowners of The Coca-Cola Company (USD $ in millions) | |||||
| | Total assets (USD $ in millions) | |||||
| | ROA1 | % | % | % | % | % |
| Adjusted for Operating Leases | ||||||
| | Net income attributable to shareowners of The Coca-Cola Company (USD $ in millions) | |||||
| | Adjusted total assets (USD $ in millions) | |||||
| | Adjusted ROA2 | % | % | % | % | % |
2017 Calculations
1 ROA = 100 × Net income attributable to shareowners of The Coca-Cola Company ÷ Total assets
= 100 × ÷ = %
2 Adjusted ROA = 100 × Net income attributable to shareowners of The Coca-Cola Company ÷ Adjusted total assets
= 100 × ÷ = %
| Ratio | Description | The company |
|---|---|---|
| Adjusted ROA | A profitability ratio calculated as net income divided by adjusted total assets. | Coca-Cola Co.'s adjusted ROA deteriorated from 2015 to 2016 and from 2016 to 2017. |
