Stock Analysis on Net

Amazon.com Inc. (NASDAQ:AMZN)

Financial Reporting Quality: Aggregate Accruals

Microsoft Excel

Earnings can be decomposed into cash and accrual components. The accrual component (aggregate accruals) has been found to have less persistence than the cash component, and therefore (1) earnings with higher accrual component are less persistent than earnings with smaller accrual component, all else equal; and (2) the cash component of earnings should receive a higher weighting evaluating company performance.


Balance-Sheet-Based Accruals Ratio

Amazon.com Inc., balance sheet computation of aggregate accruals

US$ in millions

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Operating Assets
Total assets 527,854 462,675 420,549 321,195 225,248
Less: Cash and cash equivalents 73,387 53,888 36,220 42,122 36,092
Less: Marketable securities 13,393 16,138 59,829 42,274 18,929
Operating assets 441,074 392,649 324,500 236,799 170,227
Operating Liabilities
Total liabilities 325,979 316,632 282,304 227,791 163,188
Less: Current portion of lease liabilities, finance leases 2,032 4,397 8,083 10,374 9,884
Less: Current portion of long-term debt 8,494 2,999 1,491 1,155 1,305
Less: Long-term lease liabilities, finance leases, excluding current portion 10,077 11,386 15,670 18,060 17,095
Less: Long-term debt, excluding current portion 58,314 67,150 48,744 31,816 23,414
Operating liabilities 247,062 230,700 208,316 166,386 111,490
 
Net operating assets1 194,012 161,949 116,184 70,413 58,737
Balance-sheet-based aggregate accruals2 32,063 45,765 45,771 11,676
Financial Ratio
Balance-sheet-based accruals ratio3 18.01% 32.91% 49.06% 18.08%
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
Home Depot Inc. 15.25% 9.91% 21.77% 2.66%
Lowe’s Cos. Inc. -2.92% 2.66% -12.39% 6.39%
TJX Cos. Inc. 30.23% 73.65% -109.84% 15.53% 3.29%
Balance-Sheet-Based Accruals Ratio, Sector
Consumer Discretionary Distribution & Retail 16.15% 26.47% 31.88% 12.49%
Balance-Sheet-Based Accruals Ratio, Industry
Consumer Discretionary 10.97% 11.48% 14.28% 5.02%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

1 2023 Calculation
Net operating assets = Operating assets – Operating liabilities
= 441,074247,062 = 194,012

2 2023 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2023 – Net operating assets2022
= 194,012161,949 = 32,063

3 2023 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × 32,063 ÷ [(194,012 + 161,949) ÷ 2] = 18.01%

4 Click competitor name to see calculations.

Financial ratio Description The company
Balance-sheet-based accruals ratio Ratio is found by dividing balance-sheet-based aggregate accruals by average net operating assets. Using the balance-sheet-based accruals ratio, Amazon.com Inc. improved earnings quality from 2022 to 2023.

Cash-Flow-Statement-Based Accruals Ratio

Amazon.com Inc., cash flow statement computation of aggregate accruals

US$ in millions

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Net income (loss) 30,425 (2,722) 33,364 21,331 11,588
Less: Net cash provided by operating activities 84,946 46,752 46,327 66,064 38,514
Less: Net cash used in investing activities (49,833) (37,601) (58,154) (59,611) (24,281)
Cash-flow-statement-based aggregate accruals (4,688) (11,873) 45,191 14,878 (2,645)
Financial Ratio
Cash-flow-statement-based accruals ratio1 -2.63% -8.54% 48.44% 23.04%
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
Home Depot Inc. 14.43% 8.24% 14.26% 0.66%
Lowe’s Cos. Inc. -4.62% -0.14% -17.28% 6.85%
TJX Cos. Inc. 23.97% 55.57% -121.39% 14.48% -9.68%
Cash-Flow-Statement-Based Accruals Ratio, Sector
Consumer Discretionary Distribution & Retail 0.41% -4.02% 29.06% 14.86%
Cash-Flow-Statement-Based Accruals Ratio, Industry
Consumer Discretionary 4.38% 1.95% 10.92% 3.35%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

1 2023 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × -4,688 ÷ [(194,012 + 161,949) ÷ 2] = -2.63%

2 Click competitor name to see calculations.

Financial ratio Description The company
Cash-flow-statement-based accruals ratio Ratio is found by dividing cash-flow-statement-based aggregate accruals by average net operating assets. Using the cash-flow-statement-based accruals ratio, Amazon.com Inc. improved earnings quality from 2022 to 2023.