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Operating schedules · in 1 model

Store leases under IFRS 16

Right-of-use assets, lease liabilities, EBITDA on both bases.

By Surojit Chakraverti, founder of L3VLUP and an investor running a long-short healthcare and technology equities strategy.

On this subject: store leases under ifrs 16.Updated 5 November 2026

What it does

A retailer’s largest commitment after its stock. Under IFRS 16 each store lease is a lease liability, the rent discounted at the incremental borrowing rate, and a right-of-use asset of the same amount, depreciated over the lease. Rent leaves EBITDA and comes back below it as depreciation and interest, so EBITDA rises while the cash does not change. New stores and renewals add leases at present value; rent paid repays the liability with interest.

Where it lives

The same schedule in each model that carries it, with the rows to open. Open a model in the browser, go to the sheet, and click the lines.

Multi-store retail model
  • Assumptions, rows 58–59: Lease term, Incremental borrowing rate
  • Leases, rows 6–9: Present value of £1 of rent a year for the lease term, Lease liability per £1 of rent, a book of evenly spread leases, Right-of-use asset per £1 of rent, the same book, Depreciation, % of the opening right-of-use asset
  • Leases, rows 12–16: Leases on new stores, Leases reaching the end of their term, Leases renewed, Rent per lease…
  • Leases, rows 19–24: Opening lease liability, Add: leases added, Add: interest, Less: rent paid…
  • Leases, rows 27–30: Opening right-of-use asset, Add: leases added, Less: depreciation, Closing right-of-use asset
  • Leases, rows 33–36: Depreciation plus interest, Rent paid, IFRS 16 cost above rent, Check: lease liability below zero
  • Profit, rows 6–16: EBITDA under IFRS 16, Depreciation of PP&E, Depreciation of right-of-use assets, EBIT…
  • Profit, rows 19–24: EBITDA before IFRS 16, Depreciation of PP&E, EBIT before IFRS 16, EBIT margin before IFRS 16…
Inspect it in the browser Worked model

What a reviewer looks for

  • A multiple of IFRS 16 EBITDA on an enterprise value without the leases.
  • Rent deducted from cash flow and the lease liability deducted again from value.
  • Lease payments left in operating cash flow under IFRS 16.

Learn it, then build it

Read · Guide · 15 min

How to Build a Three-Statement Model That Actually Balances

Vocabulary: Operating Lease, EBITDA.

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