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Apple Inc. (AAPL)
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
US$ in millions
| Sep 29, 2018 | Sep 30, 2017 | Sep 24, 2016 | Sep 26, 2015 | Sep 27, 2014 | Sep 28, 2013 | ||
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| Operating Assets | |||||||
| Total assets | |
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| Less: Cash and cash equivalents | |
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| Less: Short-term marketable securities | |
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| Operating assets | |
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| Operating Liabilities | |||||||
| Total liabilities | |
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| Less: Commercial paper | |
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| Less: Current portion of term debt | |
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| Less: Term debt, excluding current portion | |
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| Operating liabilities | |
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| Net operating assets1 | |
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| Balance-sheet-based aggregate accruals2 | |
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| Ratio | |||||||
| Balance-sheet-based accruals ratio3 | |
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| Benchmarks | |||||||
| Balance-Sheet-Based Accruals Ratio, Competitors4 | |||||||
| Applied Materials Inc. | |
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| Broadcom Inc. | |
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| Cisco Systems Inc. | |
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| Intel Corp. | |
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| NVIDIA Corp. | |
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| Qualcomm Inc. | |
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| Texas Instruments Inc. | |
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| Balance-Sheet-Based Accruals Ratio, Sector | |||||||
| Technology Hardware & Equipment | |
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| Balance-Sheet-Based Accruals Ratio, Industry | |||||||
| Technology | |
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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).
1 2018 Calculation
Net operating assets = Operating assets – Operating liabilities
= – =
2 2018 Calculation
Balance-sheet-based aggregate accruals = Net operating assets 2018 – Net operating assets 2017
= – =
3 2018 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.
| 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
US$ in millions
| Sep 29, 2018 | Sep 30, 2017 | Sep 24, 2016 | Sep 26, 2015 | Sep 27, 2014 | Sep 28, 2013 | ||
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| Net income | |
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| Less: Cash generated by operating activities | |
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| Less: Cash (used in) generated by investing activities | |
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| Cash-flow-statement-based aggregate accruals | |
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| Ratio | |||||||
| Cash-flow-statement-based accruals ratio1 | |
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| Benchmarks | |||||||
| Cash-Flow-Statement-Based Accruals Ratio, Competitors2 | |||||||
| Applied Materials Inc. | |
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| Broadcom Inc. | |
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| Cisco Systems Inc. | |
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| Intel Corp. | |
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| NVIDIA Corp. | |
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| Qualcomm Inc. | |
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| Texas Instruments Inc. | |
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| Cash-Flow-Statement-Based Accruals Ratio, Sector | |||||||
| Technology Hardware & Equipment | |
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| Cash-Flow-Statement-Based Accruals Ratio, Industry | |||||||
| Technology | |
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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).
1 2018 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.
| 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. |