Stock Analysis on Net

Booking Holdings Inc. (NASDAQ:BKNG)

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

Booking Holdings 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 24,342 25,361 23,641 21,874 21,402
Less: Cash and cash equivalents 12,107 12,221 11,127 10,562 6,312
Less: Short-term investments 576 175 25 501 998
Operating assets 11,659 12,965 12,489 10,811 14,092
Operating Liabilities
Total liabilities 27,086 22,579 17,463 16,981 15,469
Less: Current finance lease liabilities 34 21 4
Less: Short-term debt 1,961 500 1,989 985 988
Less: Non-current finance lease liabilities 34 32 6
Less: Long-term debt 12,223 11,985 8,937 11,029 7,640
Operating liabilities 12,834 10,041 6,527 4,967 6,841
 
Net operating assets1 (1,175) 2,924 5,962 5,844 7,251
Balance-sheet-based aggregate accruals2 (4,099) (3,038) 118 (1,407)
Financial Ratio
Balance-sheet-based accruals ratio3 -468.72% -68.38% 2.00% -21.49%
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
Airbnb Inc.
Carnival Corp. & plc -1.60% -1.74% -4.80% 4.44% 7.31%
Chipotle Mexican Grill Inc. 18.41% 18.43% 13.32% 28.47%
McDonald’s Corp. 9.94% 8.46% 0.56% 4.29%
Starbucks Corp. 13.66% 10.72% -25.79% 45.93% 25.97%
Balance-Sheet-Based Accruals Ratio, Sector
Consumer Services 1.75% -1.84% -2.87% 1.72%
Balance-Sheet-Based Accruals Ratio, Industry
Consumer Discretionary 10.97% 11.48% 14.28% 5.02%

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
= 11,65912,834 = -1,175

2 2023 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2023 – Net operating assets2022
= -1,1752,924 = -4,099

3 2023 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × -4,099 ÷ [(-1,175 + 2,924) ÷ 2] = -468.72%

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, Booking Holdings Inc. deteriorated earnings quality from 2022 to 2023.

Cash-Flow-Statement-Based Accruals Ratio

Booking Holdings 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 4,289 3,058 1,165 59 4,865
Less: Net cash provided by operating activities 7,344 6,554 2,820 85 4,865
Less: Net cash (used in) provided by investing activities 1,486 (518) (998) 2,637 7,050
Cash-flow-statement-based aggregate accruals (4,541) (2,978) (657) (2,663) (7,050)
Financial Ratio
Cash-flow-statement-based accruals ratio1 -519.27% -67.03% -11.13% -40.67%
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
Airbnb Inc.
Carnival Corp. & plc -4.38% 0.96% -4.98% -1.87% 7.96%
Chipotle Mexican Grill Inc. 24.18% 30.18% -9.35% 13.32%
McDonald’s Corp. 6.77% 5.35% 2.17% 0.04%
Starbucks Corp. 12.06% 36.35% -47.73% 36.84% -22.66%
Cash-Flow-Statement-Based Accruals Ratio, Sector
Consumer Services -1.88% -1.76% -6.55% -8.60%
Cash-Flow-Statement-Based Accruals Ratio, Industry
Consumer Discretionary 4.38% 1.95% 10.92% 3.35%

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 × -4,541 ÷ [(-1,175 + 2,924) ÷ 2] = -519.27%

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, Booking Holdings Inc. deteriorated earnings quality from 2022 to 2023.