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Microsoft Excel LibreOffice Calc


Financial Reporting Quality: Aggregate Accruals

Difficulty: Advanced

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

Apple Inc., balance sheet computation of aggregate accruals

USD $ in millions

Microsoft Excel LibreOffice Calc
Sep 29, 2018 Sep 30, 2017 Sep 24, 2016 Sep 26, 2015 Sep 27, 2014 Sep 28, 2013
Operating Assets
Total assets hidden hidden hidden hidden hidden hidden
Less: Cash and cash equivalents hidden hidden hidden hidden hidden hidden
Less: Short-term marketable securities hidden hidden hidden hidden hidden hidden
Operating assets hidden hidden hidden hidden hidden hidden
Operating Liabilities
Total liabilities hidden hidden hidden hidden hidden hidden
Less: Commercial paper hidden hidden hidden hidden hidden hidden
Less: Current portion of term debt hidden hidden hidden hidden hidden hidden
Less: Term debt, excluding current portion hidden hidden hidden hidden hidden hidden
Operating liabilities hidden hidden hidden hidden hidden hidden
Net operating assets1 hidden hidden hidden hidden hidden hidden
Balance-sheet-based aggregate accruals2 hidden hidden hidden hidden hidden hidden
Ratio
Balance-sheet-based accruals ratio3 hidden hidden hidden hidden hidden hidden
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors
Applied Materials Inc. hidden hidden hidden hidden hidden hidden
Broadcom Inc. hidden hidden hidden hidden hidden hidden
Cisco Systems Inc. hidden hidden hidden hidden hidden hidden
HP Inc. hidden hidden hidden hidden hidden hidden
Intel Corp. hidden hidden hidden hidden hidden hidden
NVIDIA Corp. hidden hidden hidden hidden hidden hidden
Qualcomm Inc. hidden hidden hidden hidden hidden hidden
Texas Instruments Inc. hidden hidden hidden hidden hidden hidden
Balance-Sheet-Based Accruals Ratio, Sector
Technology Hardware & Equipment hidden hidden hidden hidden hidden hidden
Balance-Sheet-Based Accruals Ratio, Industry
Technology hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2018-11-05), 10-K (filing date: 2017-11-03), 10-K (filing date: 2016-10-26), 10-K (filing date: 2015-10-28), 10-K (filing date: 2014-10-27), 10-K (filing date: 2013-10-30).

2018 Calculations

1 Net operating assets = Operating assets – Operating liabilities
= hiddenhidden = hidden

2 Balance-sheet-based aggregate accruals = Net operating assets 2018 – Net operating assets 2017
= hiddenhidden = hidden

3 Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × hidden ÷ [(hidden + hidden) ÷ 2] = hidden

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, Apple Inc. improved earnings quality from 2017 to 2018.

Cash-Flow-Statement-Based Accruals Ratio

Apple Inc., cash flow statement computation of aggregate accruals

USD $ in millions

Microsoft Excel LibreOffice Calc
Sep 29, 2018 Sep 30, 2017 Sep 24, 2016 Sep 26, 2015 Sep 27, 2014 Sep 28, 2013
Net income hidden hidden hidden hidden hidden hidden
Less: Cash generated by operating activities hidden hidden hidden hidden hidden hidden
Less: Cash (used in) generated by investing activities hidden hidden hidden hidden hidden hidden
Cash-flow-statement-based aggregate accruals hidden hidden hidden hidden hidden hidden
Ratio
Cash-flow-statement-based accruals ratio1 hidden hidden hidden hidden hidden hidden
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors
Applied Materials Inc. hidden hidden hidden hidden hidden hidden
Broadcom Inc. hidden hidden hidden hidden hidden hidden
Cisco Systems Inc. hidden hidden hidden hidden hidden hidden
HP Inc. hidden hidden hidden hidden hidden hidden
Intel Corp. hidden hidden hidden hidden hidden hidden
NVIDIA Corp. hidden hidden hidden hidden hidden hidden
Qualcomm Inc. hidden hidden hidden hidden hidden hidden
Texas Instruments Inc. hidden hidden hidden hidden hidden hidden
Cash-Flow-Statement-Based Accruals Ratio, Sector
Technology Hardware & Equipment hidden hidden hidden hidden hidden hidden
Cash-Flow-Statement-Based Accruals Ratio, Industry
Technology hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2018-11-05), 10-K (filing date: 2017-11-03), 10-K (filing date: 2016-10-26), 10-K (filing date: 2015-10-28), 10-K (filing date: 2014-10-27), 10-K (filing date: 2013-10-30).

2018 Calculations

1 Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × hidden ÷ [(hidden + hidden) ÷ 2] = hidden

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, Apple Inc. deteriorated earnings quality from 2017 to 2018.