Stock Analysis on Net

Amgen Inc. (NASDAQ:AMGN)

Financial Reporting Quality: Aggregate Accruals

Microsoft Excel

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

Amgen Inc., balance sheet computation of aggregate accruals

US$ in millions

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Operating Assets
Total assets 97,154 65,121 61,165 62,948 59,707
Less: Cash and cash equivalents 10,944 7,629 7,989 6,266 6,037
Less: Marketable securities 1,676 48 4,381 2,874
Operating assets 86,210 55,816 53,128 52,301 50,796
Operating Liabilities
Total liabilities 90,922 61,460 54,465 53,539 50,034
Less: Current portion of long-term debt 1,443 1,591 87 91 2,953
Less: Long-term debt, excluding current portion 63,170 37,354 33,222 32,895 26,950
Operating liabilities 26,309 22,515 21,156 20,553 20,131
 
Net operating assets1 59,901 33,301 31,972 31,748 30,665
Balance-sheet-based aggregate accruals2 26,600 1,329 224 1,083
Financial Ratio
Balance-sheet-based accruals ratio3 57.08% 4.07% 0.70% 3.47%
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
AbbVie Inc. -22.39% -14.27% -9.69% 131.82%
Bristol-Myers Squibb Co. -7.12% -3.86% -13.40% -13.24%
Eli Lilly & Co. 28.84% 11.38% 16.60% 18.42%
Gilead Sciences Inc. 1.04% -2.92% -2.34% 59.36%
Johnson & Johnson -21.13% 19.84% 3.75% 7.76%
Merck & Co. Inc. 3.16% 0.46% 25.14% 15.90%
Pfizer Inc. 30.66% 24.95% -7.11% -14.91%
Regeneron Pharmaceuticals Inc. 1.17% 11.07% 43.54% 16.50%
Thermo Fisher Scientific Inc. 4.97% -1.78% 43.38% 1.98%
Vertex Pharmaceuticals Inc. 61.24% 14.07% 18.20% -8.97%
Balance-Sheet-Based Accruals Ratio, Sector
Pharmaceuticals, Biotechnology & Life Sciences 7.77% 5.56% 5.06% 17.61%
Balance-Sheet-Based Accruals Ratio, Industry
Health Care 8.00% 2.36% 5.50% 10.57%

Based on: 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), 10-K (reporting date: 2019-12-31).

1 2023 Calculation
Net operating assets = Operating assets – Operating liabilities
= 86,21026,309 = 59,901

2 2023 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2023 – Net operating assets2022
= 59,90133,301 = 26,600

3 2023 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × 26,600 ÷ [(59,901 + 33,301) ÷ 2] = 57.08%

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, Amgen Inc. deteriorated earnings quality from 2022 to 2023.

Cash-Flow-Statement-Based Accruals Ratio

Amgen Inc., cash flow statement computation of aggregate accruals

US$ in millions

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Net income 6,717 6,552 5,893 7,264 7,842
Less: Net cash provided by operating activities 8,471 9,721 9,261 10,497 9,150
Less: Net cash (used in) provided by investing activities (26,204) (6,044) 733 (5,401) 5,709
Cash-flow-statement-based aggregate accruals 24,450 2,875 (4,101) 2,168 (7,017)
Financial Ratio
Cash-flow-statement-based accruals ratio1 52.47% 8.81% -12.87% 6.95%
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
AbbVie Inc. -24.89% -16.25% -10.28% 44.98%
Bristol-Myers Squibb Co. -5.99% -9.10% -12.73% -15.67%
Eli Lilly & Co. 28.13% 10.32% 5.30% 11.38%
Gilead Sciences Inc. -0.19% -4.95% -4.86% 20.18%
Johnson & Johnson 13.66% 10.78% 8.23% 17.00%
Merck & Co. Inc. 2.23% 0.61% 29.09% 13.75%
Pfizer Inc. 19.96% 18.46% 13.18% 3.27%
Regeneron Pharmaceuticals Inc. 14.35% 18.61% 49.24% 10.32%
Thermo Fisher Scientific Inc. 3.80% -0.06% 34.69% -0.89%
Vertex Pharmaceuticals Inc. 62.03% -14.45% 1.38% -23.47%
Cash-Flow-Statement-Based Accruals Ratio, Sector
Pharmaceuticals, Biotechnology & Life Sciences 9.84% 2.64% 7.05% 9.16%
Cash-Flow-Statement-Based Accruals Ratio, Industry
Health Care 8.56% 2.29% 6.44% 6.57%

Based on: 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), 10-K (reporting date: 2019-12-31).

1 2023 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × 24,450 ÷ [(59,901 + 33,301) ÷ 2] = 52.47%

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, Amgen Inc. deteriorated earnings quality from 2022 to 2023.