An article in CFO Magazine, July 2007 issue - page 77, caught my eye. In 2 years, a major accounting change will take place concerning "lease accounting".

First some background: Currently, a large retail chain can avoid putting most of what they lease off their balance sheet by setting-up a captive reit (captive, meaning the company alone owns all the reit stock). The company then identifies a potential store site. The captive reit then buys the site and the company leases the site from the reit. Then, the reit pays dividends to the company. (There are various tax benefits with this set-up, as well.)

In two years, these same companies will have to account for these leases on their balance sheets. The SEC estimates that there are $1.25 trillion of these future cash obligations that reside off the books.

Some of the companies that will be affected by this change are: CVS, Home Depot, Kroger, Walgreen, & (the biggest gorilla of all) Walmart. 

The primary concern with the change, is that the ratios used by investors, banks, etc. to decide whether to invest or lend money will be dramatically and adversely affected. The article states that new ratios will have to be developed to account for these changes. Also, the article mentions various possible scenarios that might take place after the change, so nailing down how the change will affect stocks is still uncertain.

So, how can knowing about this change benefit you? Well, if you have a prospect who owns stock in the abovementioned companies (or any company that employs these methods), mentioning this change could make you look like genius compared to the other broker. 

Ahhhhhhhh, I can picture it now. As soon as your prospect hears the news from you, they call their broker and ask about this accounting change. The other broker says, "Huh, what accounting change?" 

You can thank me, later.