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TJX Cos. Inc. (TJX)
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.
Operating Leases Accounting Policy
TJX generally leases stores, distribution centers and office space under operating leases. Store lease agreements generally include rent holidays, rent escalation clauses and contingent rent provisions for percentage of sales in excess of specified levels. TJX recognizes rent on a straight-line basis over the term of the lease, including rent holiday periods and scheduled rent increases. TJX begins recording rent expense when TJX takes possession of a store, which is typically 30 to 60 days prior to the opening of the store and generally occurs before the commencement of the lease term, as specified in the lease.
Source: 10-K (filing date: 2019-04-03).
Present Value of Future Operating Lease Payments (before Adoption of FASB Topic 842)
TJX Cos. Inc., future operating lease payments (before adoption of FASB Topic 842)
USD $ in thousands
| Feb 2, 2019 | Feb 3, 2018 | Jan 28, 2017 | Jan 30, 2016 | Jan 31, 2015 | Feb 1, 2014 | ||
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| Total undiscounted future operating lease payments | |
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| Discount rate1 | |
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| Total present value of future operating lease payments | |
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Based on: 10-K (filing date: 2019-04-03), 10-K (filing date: 2018-04-04), 10-K (filing date: 2017-03-28), 10-K (filing date: 2016-03-29), 10-K (filing date: 2015-03-31), 10-K (filing date: 2014-04-01).
1 Weighted-average interest rate for TJX Cos. Inc.’s debt
| Year | Future operating lease payments (as reported) | Year | Future operating lease payments (estimated) | Present value at |
|---|---|---|---|---|
| 2020 | |
2020 | |
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| 2021 | |
2021 | |
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| 2022 | |
2022 | |
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| 2023 | |
2023 | |
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| 2024 | |
2024 | |
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| 2025 and thereafter | |
2025 | |
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| 2026 | |
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| 2027 | |
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| Total: | |
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Based on: 10-K (filing date: 2019-04-03).
| Year | Future operating lease payments (as reported) | Year | Future operating lease payments (estimated) | Present value at |
|---|---|---|---|---|
| 2019 | |
2019 | |
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| 2020 | |
2020 | |
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| 2021 | |
2021 | |
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| 2022 | |
2022 | |
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| 2023 | |
2023 | |
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| 2024 and thereafter | |
2024 | |
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| 2025 | |
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| 2026 | |
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| Total: | |
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Based on: 10-K (filing date: 2018-04-04).
| Year | Future operating lease payments (as reported) | Year | Future operating lease payments (estimated) | Present value at |
|---|---|---|---|---|
| 2018 | |
2018 | |
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| 2019 | |
2019 | |
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| 2020 | |
2020 | |
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| 2021 | |
2021 | |
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| 2022 | |
2022 | |
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| 2023 and thereafter | |
2023 | |
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| 2024 | |
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| 2025 | |
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| Total: | |
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Based on: 10-K (filing date: 2017-03-28).
| Year | Future operating lease payments (as reported) | Year | Future operating lease payments (estimated) | Present value at |
|---|---|---|---|---|
| 2017 | |
2017 | |
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| 2018 | |
2018 | |
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| 2019 | |
2019 | |
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| 2020 | |
2020 | |
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| 2021 | |
2021 | |
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| 2022 and thereafter | |
2022 | |
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| 2023 | |
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| 2024 | |
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| Total: | |
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Based on: 10-K (filing date: 2016-03-29).
| Year | Future operating lease payments (as reported) | Year | Future operating lease payments (estimated) | Present value at |
|---|---|---|---|---|
| 2016 | |
2016 | |
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| 2017 | |
2017 | |
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| 2018 | |
2018 | |
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| 2019 | |
2019 | |
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| 2020 | |
2020 | |
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| 2021 and thereafter | |
2021 | |
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| 2022 | |
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| 2023 | |
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| 2024 | |
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| Total: | |
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Based on: 10-K (filing date: 2015-03-31).
| Year | Future operating lease payments (as reported) | Year | Future operating lease payments (estimated) | Present value at |
|---|---|---|---|---|
| 2015 | |
2015 | |
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| 2016 | |
2016 | |
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| 2017 | |
2017 | |
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| 2018 | |
2018 | |
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| 2019 | |
2019 | |
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| 2020 and thereafter | |
2020 | |
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| 2021 | |
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| 2022 | |
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| 2023 | |
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| Total: | |
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Based on: 10-K (filing date: 2014-04-01).
Analyst Adjustments for Operating Leases
TJX Cos. Inc., adjustments to financial data
USD $ in thousands
Based on: 10-K (filing date: 2019-04-03), 10-K (filing date: 2018-04-04), 10-K (filing date: 2017-03-28), 10-K (filing date: 2016-03-29), 10-K (filing date: 2015-03-31), 10-K (filing date: 2014-04-01).
1, 2 Equal to total present value of future operating lease payments.
TJX Cos. Inc., Financial Data: Reported vs. Adjusted
Adjusted Ratios for Operating Leases (Summary)
TJX Cos. Inc., adjusted ratios
Based on: 10-K (filing date: 2019-04-03), 10-K (filing date: 2018-04-04), 10-K (filing date: 2017-03-28), 10-K (filing date: 2016-03-29), 10-K (filing date: 2015-03-31), 10-K (filing date: 2014-04-01).
| Ratio | Description | The company |
|---|---|---|
| Adjusted total asset turnover | An activity ratio calculated as total revenue divided by adjusted total assets. | TJX Cos. Inc.’s adjusted total asset turnover deteriorated from 2017 to 2018 but then improved from 2018 to 2019 exceeding 2017 level. |
| Adjusted debt-to-equity | A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. | TJX Cos. Inc.’s adjusted debt-to-equity improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019 not reaching 2017 level. |
| Adjusted ROA | A profitability ratio calculated as net income divided by adjusted total assets. | TJX Cos. Inc.’s adjusted ROA improved from 2017 to 2018 and from 2018 to 2019. |
TJX Cos. Inc., Ratios: Reported vs. Adjusted
Adjusted Total Asset Turnover
Based on: 10-K (filing date: 2019-04-03), 10-K (filing date: 2018-04-04), 10-K (filing date: 2017-03-28), 10-K (filing date: 2016-03-29), 10-K (filing date: 2015-03-31), 10-K (filing date: 2014-04-01).
2019 Calculations
1 Total asset turnover = Net sales ÷ Total assets
= ÷ =
2 Adjusted total asset turnover = Net sales ÷ Adjusted total assets
= ÷ =
| Ratio | Description | The company |
|---|---|---|
| Adjusted total asset turnover | An activity ratio calculated as total revenue divided by adjusted total assets. | TJX Cos. Inc.’s adjusted total asset turnover deteriorated from 2017 to 2018 but then improved from 2018 to 2019 exceeding 2017 level. |
Adjusted Debt to Equity
Based on: 10-K (filing date: 2019-04-03), 10-K (filing date: 2018-04-04), 10-K (filing date: 2017-03-28), 10-K (filing date: 2016-03-29), 10-K (filing date: 2015-03-31), 10-K (filing date: 2014-04-01).
2019 Calculations
1 Debt to equity = Total debt ÷ Shareholders’ equity
= ÷ =
2 Adjusted debt to equity = Adjusted total debt ÷ Shareholders’ equity
= ÷ =
| Ratio | Description | The company |
|---|---|---|
| Adjusted debt-to-equity | A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. | TJX Cos. Inc.’s adjusted debt-to-equity improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019 not reaching 2017 level. |
Adjusted Return on Assets (ROA)
Based on: 10-K (filing date: 2019-04-03), 10-K (filing date: 2018-04-04), 10-K (filing date: 2017-03-28), 10-K (filing date: 2016-03-29), 10-K (filing date: 2015-03-31), 10-K (filing date: 2014-04-01).
2019 Calculations
1 ROA = 100 × Net income ÷ Total assets
= 100 × ÷ =
2 Adjusted ROA = 100 × Net income ÷ Adjusted total assets
= 100 × ÷ =
| Ratio | Description | The company |
|---|---|---|
| Adjusted ROA | A profitability ratio calculated as net income divided by adjusted total assets. | TJX Cos. Inc.’s adjusted ROA improved from 2017 to 2018 and from 2018 to 2019. |