Stock Analysis on Net

ConocoPhillips (NYSE:COP)

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

ConocoPhillips, 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 95,924 93,829 90,661 62,618 70,514
Less: Cash and cash equivalents 5,635 6,458 5,028 2,991 5,088
Less: Short-term investments 971 2,785 446 3,609 3,028
Less: Investment in Cenovus Energy 1,117 1,256 2,111
Operating assets 89,318 84,586 84,070 54,762 60,287
Operating Liabilities
Total liabilities 46,645 45,826 45,255 32,769 35,464
Less: Short-term debt 1,074 417 1,200 619 105
Less: Long-term debt 17,863 16,226 18,734 14,750 14,790
Operating liabilities 27,708 29,183 25,321 17,400 20,569
 
Net operating assets1 61,610 55,403 58,749 37,362 39,718
Balance-sheet-based aggregate accruals2 6,207 (3,346) 21,387 (2,356)
Financial Ratio
Balance-sheet-based accruals ratio3 10.61% -5.86% 44.50% -6.11%
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
Chevron Corp. 5.21% 0.03% -3.43% 2.95%
Exxon Mobil Corp. 3.91% -1.19% -4.87% -6.54%
Marathon Petroleum Corp. -3.17% 3.53% -23.90% -13.70%
Occidental Petroleum Corp. -0.56% 3.65% -11.15% -27.81%
Valero Energy Corp. 7.13% 8.66% -4.76% 4.56%
Balance-Sheet-Based Accruals Ratio, Sector
Oil, Gas & Consumable Fuels 4.18% 0.05% -2.67% -6.24%
Balance-Sheet-Based Accruals Ratio, Industry
Energy 4.31% 0.22% -2.56% -7.65%

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
= 89,31827,708 = 61,610

2 2023 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2023 – Net operating assets2022
= 61,61055,403 = 6,207

3 2023 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × 6,207 ÷ [(61,610 + 55,403) ÷ 2] = 10.61%

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, ConocoPhillips deteriorated earnings quality from 2022 to 2023.

Cash-Flow-Statement-Based Accruals Ratio

ConocoPhillips, 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) attributable to ConocoPhillips 10,957 18,680 8,079 (2,701) 7,189
Less: Net cash provided by operating activities 19,965 28,314 16,996 4,802 11,104
Less: Net cash used in investing activities (12,000) (8,741) (8,544) (4,121) (6,618)
Cash-flow-statement-based aggregate accruals 2,992 (893) (373) (3,382) 2,703
Financial Ratio
Cash-flow-statement-based accruals ratio1 5.11% -1.56% -0.78% -8.78%
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
Chevron Corp. 0.58% -1.22% -4.57% -5.42%
Exxon Mobil Corp. -0.04% -2.93% -6.69% -7.93%
Marathon Petroleum Corp. -2.72% -4.94% 14.35% -11.70%
Occidental Petroleum Corp. -1.30% 2.84% -13.52% -29.21%
Valero Energy Corp. 4.40% 5.69% -9.15% 0.18%
Cash-Flow-Statement-Based Accruals Ratio, Sector
Oil, Gas & Consumable Fuels 0.59% -1.51% -4.28% -9.46%
Cash-Flow-Statement-Based Accruals Ratio, Industry
Energy 0.62% -1.25% -4.41% -10.74%

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 × 2,992 ÷ [(61,610 + 55,403) ÷ 2] = 5.11%

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, ConocoPhillips deteriorated earnings quality from 2022 to 2023.