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:
- Common-Size Income Statement
- Analysis of Solvency Ratios
- Analysis of Long-term (Investment) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value to EBITDA (EV/EBITDA)
- Enterprise Value to FCFF (EV/FCFF)
- Selected Financial Data since 2020
- Return on Equity (ROE) since 2020
- Total Asset Turnover since 2020
- Analysis of Revenues
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Balance-Sheet-Based Accruals Ratio
Airbnb Inc., balance sheet computation of aggregate accruals
US$ in millions
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| 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. | ||||||
| DoorDash, 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: 2025-12-31), 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).
1 2025 Calculation
Net operating assets = Operating assets – Operating liabilities
= – =
2 2025 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2025 – Net operating assets2024
= – =
3 2025 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 relationship between net operating assets and balance-sheet-based aggregate accruals exhibits considerable fluctuation over the observed period. Net operating assets transitioned from a substantial negative value in 2022 to a positive value in 2023, before reverting to negative figures in subsequent years. Aggregate accruals demonstrate a contrasting pattern, moving from a negative value in 2022 to a significantly positive value in 2023, then declining in 2024 and 2025.
- Net Operating Assets
- Net operating assets began at negative US$2,075 million in 2022. A substantial increase resulted in a positive balance of US$85 million in 2023. However, this was followed by a decrease to negative US$204 million in 2024 and a further decline to negative US$816 million in 2025. This suggests potential volatility in the company’s operational performance or asset management.
- Balance-Sheet-Based Aggregate Accruals
- Balance-sheet-based aggregate accruals were negative US$511 million in 2022. A dramatic shift occurred in 2023, with accruals reaching US$2,160 million. Subsequent years saw a reduction, with accruals at negative US$289 million in 2024 and negative US$612 million in 2025. The magnitude of the 2023 accruals warrants further investigation to understand the underlying drivers of this change.
- Balance-Sheet-Based Accruals Ratio
- The balance-sheet-based accruals ratio is not populated for any of the years presented. Calculating this ratio would provide insight into the relationship between accruals and net operating assets, potentially indicating the quality of reported earnings. The absence of this metric limits a comprehensive assessment of financial reporting quality based on these figures.
The significant swings in both net operating assets and aggregate accruals suggest a dynamic financial position. The lack of accruals ratio values prevents a direct assessment of the relationship between these two components and, consequently, a complete evaluation of accruals quality.
Cash-Flow-Statement-Based Accruals Ratio
Airbnb Inc., cash flow statement computation of aggregate accruals
US$ in millions
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Net income (loss) | ||||||
| Less: Net cash provided by operating activities | ||||||
| Less: Net cash used in 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. | ||||||
| DoorDash, 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: 2025-12-31), 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).
1 2025 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 exhibited considerable fluctuation over the observed period. Beginning with a negative value of -2,075 in 2022, the figure increased substantially to 85 in 2023, before declining to -204 in 2024 and further to -816 in 2025. This suggests significant volatility in the company’s operational asset base.
- Cash-flow-statement-based aggregate accruals
- Cash-flow-statement-based aggregate accruals demonstrated a marked shift in trend. A substantial negative value of -1,509 was recorded in 2022, followed by a significant positive value of 1,950 in 2023. Subsequent years saw negative accruals of -1,254 in 2024 and -1,387 in 2025. This pattern indicates a considerable impact of non-cash items on reported earnings, with a reversal of this impact occurring between 2022 and 2023.
- Cash-flow-statement-based accruals ratio
- The cash-flow-statement-based accruals ratio is currently unavailable for all periods. Without this ratio, a direct assessment of the relationship between accruals and cash flow is not possible. Calculating this ratio would provide insight into the quality of earnings and potential areas of concern regarding earnings management. The absence of this metric limits a comprehensive evaluation of financial reporting quality.
The interplay between net operating assets and aggregate accruals suggests a complex relationship. The large positive accruals in 2023 coincided with a significant increase in net operating assets, while the negative accruals in 2024 and 2025 occurred alongside declines in net operating assets. Further investigation is warranted to understand the underlying drivers of these fluctuations and their implications for the company’s financial health.