Stock Analysis on Net
Stock Analysis on Net
Microsoft Excel LibreOffice Calc

Amazon.com Inc. (NASDAQ:AMZN)

Financial Reporting Quality: Aggregate Accruals

Advanced level

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, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Operating Assets
Total assets 225,248  162,648  131,310  83,402  65,444 
Less: Cash and cash equivalents 36,092  31,750  20,522  19,334  15,890 
Less: Marketable securities 18,929  9,500  10,464  6,647  3,918 
Operating assets 170,227  121,398  100,324  57,421  45,636 
Operating Liabilities
Total liabilities 163,188  119,099  103,601  64,117  52,060 
Less: Current portion of lease liabilities, finance leases 9,884  7,720  5,839  3,997  3,027 
Less: Current portion of long-term debt 1,307  1,371  100  1,056  238 
Less: Long-term lease liabilities, finance leases, excluding current portion 17,095  9,650  8,438  5,080  4,212 
Less: Long-term debt, excluding current portion 23,414  23,495  24,743  7,694  8,235 
Operating liabilities 111,488  76,863  64,481  46,290  36,348 
 
Net operating assets1 58,739  44,535  35,843  11,131  9,288 
Balance-sheet-based aggregate accruals2 14,204  8,692  24,712  1,843 
Financial Ratio
Balance-sheet-based accruals ratio3 27.51% 21.63% 105.22% 18.05%
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
Costco Wholesale Corp. 4.27% 3.79% -6.51% 18.80%
Dollar General Corp. 2.04% 5.02% 2.88% 3.98%
Home Depot Inc. 2.61% -2.02% -0.07% 2.47%
Lowe’s Cos. Inc. -14.72% 3.22% 9.18% -5.72%
Target Corp. 1.74% -2.57% -2.24% -12.59%
TJX Cos. Inc. 3.29% 23.01% -6.47% 11.27%
Walmart Inc. 7.50% 0.79% -4.36% -1.78%
Balance-Sheet-Based Accruals Ratio, Sector
General Retailers 8.33% 4.37% 8.42% -0.42%
Balance-Sheet-Based Accruals Ratio, Industry
Consumer Services 11.38% 16.70% 8.30% 14.77%

Based on: 10-K (filing date: 2020-01-31), 10-K (filing date: 2019-02-01), 10-K (filing date: 2018-02-02), 10-K (filing date: 2017-02-10), 10-K (filing date: 2016-01-29).

1 2019 Calculation
Net operating assets = Operating assets – Operating liabilities
= 170,227111,488 = 58,739

2 2019 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2019 – Net operating assets2018
= 58,73944,535 = 14,204

3 2019 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × 14,204 ÷ [(58,739 + 44,535) ÷ 2] = 27.51%

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. deteriorated earnings quality from 2018 to 2019.

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, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Net income 11,588  10,073  3,033  2,371  596 
Less: Net cash provided by operating activities 38,514  30,723  18,434  16,443  11,920 
Less: Net cash used in investing activities (24,281) (12,369) (27,819) (9,876) (6,450)
Cash-flow-statement-based aggregate accruals (2,645) (8,281) 12,418  (4,196) (4,874)
Financial Ratio
Cash-flow-statement-based accruals ratio1 -5.12% -20.61% 52.87% -41.10%
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
Costco Wholesale Corp. 1.32% 2.52% -13.60% 12.02%
Dollar General Corp. 1.98% 4.42% 2.37% 3.62%
Home Depot Inc. 1.98% -4.67% -0.96% 2.46%
Lowe’s Cos. Inc. -13.55% -0.81% 4.08% -4.44%
Target Corp. 1.84% -4.02% -5.22% -9.80%
TJX Cos. Inc. -9.68% 16.13% -2.63% 12.23%
Walmart Inc. 2.36% -7.84% -3.19% -1.60%
Cash-Flow-Statement-Based Accruals Ratio, Sector
General Retailers -0.62% -7.36% 2.71% -2.93%
Cash-Flow-Statement-Based Accruals Ratio, Industry
Consumer Services 1.61% 7.22% 5.01% 1.86%

Based on: 10-K (filing date: 2020-01-31), 10-K (filing date: 2019-02-01), 10-K (filing date: 2018-02-02), 10-K (filing date: 2017-02-10), 10-K (filing date: 2016-01-29).

1 2019 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × -2,645 ÷ [(58,739 + 44,535) ÷ 2] = -5.12%

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. improved earnings quality from 2018 to 2019.