Stock Analysis on Net

Activision Blizzard Inc. (NASDAQ:ATVI)

This company was transferred to the archive: financial data is no longer updated!

Financial Reporting Quality: Aggregate Accruals

Microsoft Excel LibreOffice Calc

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

Activision Blizzard Inc., balance sheet computation of aggregate accruals

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Operating Assets
Total assets 23,109  19,845  17,835  18,668  17,452 
Less: Cash and cash equivalents 8,647  5,794  4,225  4,713  3,245 
Operating assets 14,462  14,051  13,610  13,955  14,207 
Operating Liabilities
Total liabilities 8,072  7,040  6,478  9,206  8,333 
Less: Long-term debt, net 3,605  2,675  2,671  4,390  4,887 
Operating liabilities 4,467  4,365  3,807  4,816  3,446 
 
Net operating assets1 9,995  9,686  9,803  9,139  10,761 
Balance-sheet-based aggregate accruals2 309  (117) 664  (1,622) — 
Financial Ratio
Balance-sheet-based accruals ratio3 3.14% -1.20% 7.01% -16.30%
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
Alphabet Inc. 15.42% 17.54% 28.17% -3.66%
Charter Communications Inc. -2.09% -1.85% -0.51% 5.76%
Comcast Corp. 1.68% 0.12% 31.76% 13.40%
Facebook Inc. 35.56% 8.16% 27.43% 9.27%
Netflix Inc. 10.12% 37.89% 47.69% 50.97%
Walt Disney Co. -4.26% 68.46% 4.72% 6.87%
Balance-Sheet-Based Accruals Ratio, Sector
Media & Entertainment 5.13% 17.45% 18.80% 7.95%
Balance-Sheet-Based Accruals Ratio, Industry
Communication Services 6.88% 8.26% 20.61% 10.20%

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

1 2020 Calculation
Net operating assets = Operating assets – Operating liabilities
= 14,4624,467 = 9,995

2 2020 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2020 – Net operating assets2019
= 9,9959,686 = 309

3 2020 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × 309 ÷ [(9,995 + 9,686) ÷ 2] = 3.14%

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, Activision Blizzard Inc. deteriorated earnings quality from 2019 to 2020.

Cash-Flow-Statement-Based Accruals Ratio

Activision Blizzard Inc., cash flow statement computation of aggregate accruals

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Net income 2,197  1,503  1,813  273  966 
Less: Net cash provided by operating activities 2,252  1,831  1,790  2,213  2,155 
Less: Net cash used in investing activities (178) (22) (230) (197) (1,177)
Cash-flow-statement-based aggregate accruals 123  (306) 253  (1,743) (12)
Financial Ratio
Cash-flow-statement-based accruals ratio1 1.25% -3.14% 2.67% -17.52%
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
Alphabet Inc. 8.45% 11.72% 17.73% 12.54%
Charter Communications Inc. -2.81% -2.38% -0.69% 5.30%
Comcast Corp. -1.17% 1.21% 24.41% 12.14%
Facebook Inc. 36.04% 4.54% 11.74% 37.69%
Netflix Inc. 4.60% 35.30% 44.39% 39.94%
Walt Disney Co. -4.68% 18.72% 5.26% 1.15%
Cash-Flow-Statement-Based Accruals Ratio, Sector
Media & Entertainment 2.84% 6.64% 13.46% 10.83%
Cash-Flow-Statement-Based Accruals Ratio, Industry
Communication Services -0.89% 1.77% 10.10% 10.23%

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

1 2020 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × 123 ÷ [(9,995 + 9,686) ÷ 2] = 1.25%

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, Activision Blizzard Inc. improved earnings quality from 2019 to 2020.