Abiomed Inc. (NASDAQ:ABMD)

The analysis of the financial reporting quality measures reveals several notable trends over the five-year period ending March 31, 2022.

Net Operating Assets

There is a consistent upward trend in net operating assets, increasing from approximately $327 million in 2018 to about $745 million in 2021, where it slightly declines but remains nearly stable at around $745 million in 2022. This overall growth indicates expansion in the company's operating asset base over the years, suggesting increasing scale or investment in operations.

Balance-sheet-based Aggregate Accruals

Aggregate accruals exhibit a general increase from $88.8 million in 2018 to a peak of $177.2 million in 2020. However, in 2021, there is a notable decline to $123.6 million, followed by a sharp reversal to a negative accrual figure of approximately -$1.3 thousand in 2022. The negative accrual in the most recent year may indicate a significant reduction in accrual-based adjustments or changes in accounting estimates.

Balance-sheet-based Accruals Ratio

The accruals ratio, representing accruals as a percentage of net operating assets, follows a similar pattern. It rises slightly from 31.4% in 2018 to a high of 33.19% in 2020, then markedly decreases to 18.07% in 2021, and turns slightly negative at -0.17% in 2022. This decline and eventual reversal to negative suggest a decreasing reliance on accruals relative to the size of operating assets, potentially reflecting improved earnings quality or changes in accrual accounting practices.

Overall, these data points collectively suggest that while the company has been expanding its operating asset base, its accrual-based accounting adjustments have been reducing significantly in recent years, particularly in the latest period. This may imply enhanced earnings quality or a shift in accounting or operational strategies affecting the accruals levels.

Net Operating Assets

The net operating assets demonstrated a consistent upward trend from 2018 to 2021, increasing from approximately 327 million US dollars to nearly 746 million US dollars. However, in 2022, the figure stabilized, showing a negligible decline compared to the previous year. This pattern indicates significant asset growth over the initial four years, followed by a plateau in the last observed period.

Cash-flow-statement-based Aggregate Accruals

Aggregate accruals showed fluctuations across the years analyzed. From 2018 to 2019, there was a moderate increase from about 100 million to 123 million US dollars. A sharp decrease occurred in 2020, with accruals dropping to around 13.5 million US dollars. Subsequently, a substantial rebound was noted in 2021, with values rising to about 174 million US dollars, continuing to climb in 2022, reaching approximately 232 million US dollars. These variations suggest periods of changing accrual activity with possible implications for earnings quality assessment.

Cash-flow-statement-based Accruals Ratio

This ratio exhibited notable variability during the period. Initially, it remained relatively high, at 35.49% in 2018 and slightly decreased to 31.92% in 2019. A significant drop to 2.54% occurred in 2020, indicating a marked reduction in the proportion of accruals relative to operating assets or cash flows. The ratio subsequently rose again to 25.47% in 2021 and further to 31.14% in 2022. Overall, the ratio suggests fluctuating accrual quality, with a particularly low point in 2020 that may warrant further examination.