Broadcom Inc. (NASDAQ:AVGO)

Net Operating Assets

The net operating assets showed a decreasing trend from 52,556 million US dollars in 2021 to 49,028 million in 2023. However, there was a significant increase in the subsequent years, reaching 125,896 million in 2024 and further rising to 130,250 million in 2025. This indicates a substantial expansion in operating asset base after 2023.

Balance-sheet-based Aggregate Accruals

The aggregate accruals demonstrated a clear upward movement over the period. Starting with a negative value of -4,789 million in 2021, the amount decreased in magnitude to -780 million by 2023. A marked shift occurred in 2024, where accruals turned positive dramatically to 76,868 million, followed by a decrease to 4,354 million in 2025. This notable fluctuation suggests significant changes in the accrual components within the balance sheet during the later years.

Balance-sheet-based Accruals Ratio

The accruals ratio followed a similar pattern to aggregate accruals. Initially, the ratio was negative and declined in absolute terms from -8.72% in 2021 to -1.58% in 2023, reflecting reduced accruals relative to net operating assets. In 2024, the ratio rose sharply to 87.89%, indicating an unusually high level of accruals relative to operating assets. This ratio corrected downward to 3.4% in 2025, suggesting normalization after the spike.

Summary

Overall, the data reveals decreasing net operating assets and improving accrual quality with declining negative accrual ratios up to 2023. Afterwards, there is a pronounced reversal marked by a large increase in net operating assets and a significant spike in both aggregate accruals and their ratio in 2024. The subsequent slight reduction in these measures in 2025 suggests some stabilization, but the elevated accrual ratio in this period still indicates abnormal accrual levels compared to earlier years. This pattern may reflect changes in accounting practices, business operations, or other factors affecting the financial reporting quality during the later periods.

The analysis of the annual financial reporting quality measures reveals notable trends and fluctuations over the observed periods.

Net Operating Assets

The net operating assets demonstrate a generally stable level during the initial three years, with values slightly declining from approximately 52.6 billion US dollars in 2021 to around 49.0 billion in 2023. This stability is disrupted in 2024, where there is an abrupt and significant increase to nearly 126.0 billion US dollars, followed by a marginal increase to approximately 130.3 billion in 2025. The surge in net operating assets during 2024 and 2025 suggests a substantial investment or change in operational asset base.

Cash-flow-statement-based Aggregate Accruals

The aggregate accruals are negative from 2021 to 2023, starting at about -6.8 billion US dollars and weakening in magnitude to -3.3 billion US dollars in 2023. This negative range indicates a consistent outflow related to accrual adjustments during these years. However, in 2024 there is a pronounced turnaround with a positive figure of 9.0 billion US dollars, indicating a significant accrual inflow or reversal of previous accruals. This reverses again in 2025, falling back to a negative figure of approximately -3.8 billion US dollars.

Cash-flow-statement-based Accruals Ratio

The accruals ratio follows a similar pattern to the aggregate accruals, showing negative percentages during the first three years with a decreasing absolute value from -12.34% in 2021 to -6.71% in 2023. This trend indicates a reduction in the relative magnitude of accruals compared to cash flows. In 2024, the ratio becomes positive at 10.29%, reflective of the positive accruals figure, highlighting an unusual shift in accrual behavior. By 2025, the ratio returns to a negative value of -2.99%, though less extreme than previous years.

In summary, the period from 2021 to 2023 depicts a relatively stable yet gradually diminishing accrual activity accompanied by steady net operating assets. The year 2024 marks a significant departure with a sharp increase in net operating assets and a reversal in accruals, potentially indicating a strategic operational change or reassessment of asset utilization and accrual practices. The return to negative accruals in 2025, alongside a continued increase in net operating assets, suggests complexity in financial operations or transitional dynamics affecting reporting quality.