Stock Analysis on Net

Amazon.com Inc. (NASDAQ:AMZN)

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

Amazon.com 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 321,195  225,248  162,648  131,310  83,402 
Less: Cash and cash equivalents 42,122  36,092  31,750  20,522  19,334 
Less: Marketable securities 42,274  18,929  9,500  10,464  6,647 
Operating assets 236,799  170,227  121,398  100,324  57,421 
Operating Liabilities
Total liabilities 227,791  163,188  119,099  103,601  64,117 
Less: Current portion of lease liabilities, finance leases 10,374  9,884  7,720  5,839  3,997 
Less: Current portion of long-term debt 1,155  1,305  1,371  100  1,056 
Less: Long-term lease liabilities, finance leases, excluding current portion 18,060  17,095  9,650  8,438  5,080 
Less: Long-term debt, excluding current portion 31,816  23,414  23,495  24,743  7,694 
Operating liabilities 166,386  111,490  76,863  64,481  46,290 
 
Net operating assets1 70,413  58,737  44,535  35,843  11,131 
Balance-sheet-based aggregate accruals2 11,676  14,202  8,692  24,712  — 
Financial Ratio
Balance-sheet-based accruals ratio3 18.08% 27.50% 21.63% 105.22%
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
Booking Holdings Inc. -21.49% -42.38% -18.20% 5.34%
Home Depot Inc. 2.66% 2.61% -2.02% -0.07%
Lowe’s Cos. Inc. 6.39% -14.72% 3.22% 9.18%
Target Corp. -1.25% 1.74% -2.57% -2.24%
TJX Cos. Inc. 15.53% 3.29% 23.01% -6.47%
Balance-Sheet-Based Accruals Ratio, Sector
Retailing 8.91% 6.39% 5.62% 24.77%
Balance-Sheet-Based Accruals Ratio, Industry
Consumer Discretionary 5.03% 3.34% 5.30% 12.68%

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
= 236,799166,386 = 70,413

2 2020 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2020 – Net operating assets2019
= 70,41358,737 = 11,676

3 2020 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × 11,676 ÷ [(70,413 + 58,737) ÷ 2] = 18.08%

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, Amazon.com Inc. improved earnings quality from 2019 to 2020.

Cash-Flow-Statement-Based Accruals Ratio

Amazon.com 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 21,331  11,588  10,073  3,033  2,371 
Less: Net cash provided by operating activities 66,064  38,514  30,723  18,434  16,443 
Less: Net cash used in investing activities (59,611) (24,281) (12,369) (27,819) (9,876)
Cash-flow-statement-based aggregate accruals 14,878  (2,645) (8,281) 12,418  (4,196)
Financial Ratio
Cash-flow-statement-based accruals ratio1 23.04% -5.12% -20.61% 52.87%
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
Booking Holdings Inc. -40.67% -76.63% -28.98% 14.43%
Home Depot Inc. 0.66% 1.98% -4.67% -0.96%
Lowe’s Cos. Inc. 6.85% -13.55% -0.81% 4.08%
Target Corp. -4.18% 1.84% -4.02% -5.22%
TJX Cos. Inc. 14.48% -9.68% 16.13% -2.63%
Cash-Flow-Statement-Based Accruals Ratio, Sector
Retailing 9.51% -9.12% -10.83% 12.76%
Cash-Flow-Statement-Based Accruals Ratio, Industry
Consumer Discretionary 4.31% -3.99% -0.65% 7.93%

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 × 14,878 ÷ [(70,413 + 58,737) ÷ 2] = 23.04%

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, Amazon.com Inc. deteriorated earnings quality from 2019 to 2020.