Over 70% of US businesses only have 1 Location, which makes sense. This could be an LLC registered at a home address or a flexible co-working space.
Surprisingly, the mega companies have 425 locations on average. Without understanding the depth of the data, we can assume that retailers skew the data for larger companies. Pharmacies like Walgreens have 9,000+ locations, banks like Chase have 20,000+ branches/ATMs, while restaurants like McDonalds have 35,000+ locations.
So 7.5 million US Leases Will Go On The Balance Sheet?
Not so fast. We’re talking about GAAP compliance. So let’s assume that only companies with 20+ employees will consider maintaining a Balance Sheet under US GAAP. This leaves us with 500,000+ companies and 2.2 million ‘Locations’. There are certainly exceptions, such as establishments that are ‘owned’, and the occasional short-term lease.
So ~2 million US Leases Will Go On The Balance Sheet?
According to ASC 842 the new accounting standard, a material lease is not just an office location. It can include equipment, vehicles, servers, or tiny medical devices. Companies with a copier lease may have to put it on the Balance Sheet!
So we need to consider not just how many locations companies have – rather, how many leased Assets they have.
We can use an asset multiplier to determine how many additional leased assets companies have. If a company has 3 copiers, they have +3 leased assets: