Financial Reporting Quality: Aggregate Accruals
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.
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Airbnb Inc. pages available for free this week:
- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Income Statement
- Common-Size Balance Sheet: Assets
- Analysis of Solvency Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Enterprise Value to FCFF (EV/FCFF)
- Present Value of Free Cash Flow to Equity (FCFE)
- Price to Sales (P/S) since 2020
- Analysis of Debt
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Balance-Sheet-Based Accruals Ratio
Airbnb Inc., balance sheet computation of aggregate accruals
US$ in millions
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Operating Assets | ||||||
| Total assets | ||||||
| Less: Cash and cash equivalents | ||||||
| Less: Short-term investments | ||||||
| Operating assets | ||||||
| Operating Liabilities | ||||||
| Total liabilities | ||||||
| Less: Current portion of long-term debt | ||||||
| Less: Long-term debt, net of current portion | ||||||
| Operating liabilities | ||||||
| Net operating assets1 | ||||||
| Balance-sheet-based aggregate accruals2 | ||||||
| Financial Ratio | ||||||
| Balance-sheet-based accruals ratio3 | ||||||
| Benchmarks | ||||||
| Balance-Sheet-Based Accruals Ratio, Competitors4 | ||||||
| Booking Holdings Inc. | ||||||
| Chipotle Mexican Grill Inc. | ||||||
| McDonald’s Corp. | ||||||
| Starbucks Corp. | ||||||
| Balance-Sheet-Based Accruals Ratio, Sector | ||||||
| Consumer Services | ||||||
| Balance-Sheet-Based Accruals Ratio, Industry | ||||||
| Consumer Discretionary | ||||||
Based on: 10-K (reporting date: 2024-12-31), 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).
1 2024 Calculation
Net operating assets = Operating assets – Operating liabilities
= – =
2 2024 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2024 – Net operating assets2023
= – =
3 2024 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × ÷ [( + ) ÷ 2] =
4 Click competitor name to see calculations.
The data presents a fluctuating pattern in the financial quality measures over the four-year period from 2021 to 2024. There are notable changes in net operating assets and balance-sheet-based aggregate accruals that merit detailed examination.
- Net Operating Assets
- Net operating assets exhibited negative values in 2021 and 2022, showing a deepening deficit from -1,564 million US dollars to -2,075 million US dollars. This indicates a growing imbalance or higher liabilities relative to operating assets during this period. However, 2023 saw a sharp reversal, with net operating assets rising to a positive 85 million US dollars, suggesting improved operational asset management or a reduction in related liabilities. The following year, 2024, reverted slightly to a negative figure of -204 million US dollars, which, while still negative, represents a substantial improvement compared to the earlier years.
- Balance-Sheet-Based Aggregate Accruals
- This metric showed considerable volatility throughout the period. In 2021, the accruals were positive at 100 million US dollars, indicating accrual-based adjustments contributing positively to the accounting measures. The year 2022 recorded a significant negative shift to -511 million US dollars, reflecting potentially aggressive accrual reversals or cash basis improvements in accounting. The trend reversed dramatically in 2023, surging to a very high positive 2,160 million US dollars, which may signal substantial non-cash adjustments or changes in earnings management practices. By 2024, the figure declined sharply to -289 million US dollars, indicating another shift back toward negative accrual impacts.
- Balance-Sheet-Based Accruals Ratio
- The ratio data is missing for all periods, preventing analysis of the proportionate relation of accruals to net operating assets or other base measures.
Overall, the financial quality indicators display significant variability, with drastic swings in accrual values and net operating asset balances. Such volatility may reflect changes in accounting policies, operational results, or financial strategies aimed at managing reported earnings and asset liabilities. The lack of ratio data limits deeper ratio-based insights, but the raw values suggest a period of financial adjustment with potentially heightened earnings management activity especially noticeable in 2023.
Cash-Flow-Statement-Based Accruals Ratio
Airbnb Inc., cash flow statement computation of aggregate accruals
US$ in millions
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Net income (loss) | ||||||
| Less: Net cash provided by (used in) operating activities | ||||||
| Less: Net cash (used in) provided by investing activities | ||||||
| Cash-flow-statement-based aggregate accruals | ||||||
| Financial Ratio | ||||||
| Cash-flow-statement-based accruals ratio1 | ||||||
| Benchmarks | ||||||
| Cash-Flow-Statement-Based Accruals Ratio, Competitors2 | ||||||
| Booking Holdings Inc. | ||||||
| Chipotle Mexican Grill Inc. | ||||||
| McDonald’s Corp. | ||||||
| Starbucks Corp. | ||||||
| Cash-Flow-Statement-Based Accruals Ratio, Sector | ||||||
| Consumer Services | ||||||
| Cash-Flow-Statement-Based Accruals Ratio, Industry | ||||||
| Consumer Discretionary | ||||||
Based on: 10-K (reporting date: 2024-12-31), 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).
1 2024 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × ÷ [( + ) ÷ 2] =
2 Click competitor name to see calculations.
- Net Operating Assets
- The net operating assets value showed significant volatility over the examined period. In 2021 and 2022, the measure was deeply negative, decreasing from -1564 million US dollars to -2075 million US dollars, indicating a deterioration in operating asset conditions. However, a notable positive swing occurred in 2023 when the value shifted to 85 million US dollars, suggesting a temporary improvement or reclassification of operating assets. In 2024, the figure again turned negative, albeit to a lesser extent than previous low points, ending at -204 million US dollars. This pattern demonstrates considerable instability and variability in the net operating assets over the four years.
- Cash-flow-Statement-Based Aggregate Accruals
- This metric displayed a similar pattern of volatility as net operating assets. Aggregate accruals were negative in 2021 and 2022, moving from -1190 million US dollars to -1509 million US dollars, implying increasing deductions or accrual obligations that affected cash flows. In 2023, a sharp reversal took place as the value surged to 1950 million US dollars, indicating a significant positive accrual adjustment or possibly a one-time event influencing the cash flow statement. For 2024, the figure returned to a negative value of -1254 million US dollars, pointing to reversion or correction following the prior year’s unusual increase. Overall, the accrual figures reveal high fluctuations and potential irregularities in cash flow components across the analyzed period.
- Cash-flow-Statement-Based Accruals Ratio
- No data was reported for the cash-flow-statement-based accruals ratio through the periods under review, limiting analysis for this specific ratio.