Stock Analysis on Net

Charter Communications Inc. (NASDAQ:CHTR)

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

Charter Communications Inc., balance sheet computation of aggregate accruals

US$ in millions

Microsoft Excel
Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Operating Assets
Total assets 142,491  144,206  148,188  146,130  146,623 
Less: Cash and cash equivalents 601  998  3,483  551  621 
Operating assets 141,890  143,208  144,705  145,579  146,002 
Operating Liabilities
Total liabilities 124,335  113,925  109,377  101,858  99,092 
Less: Current portion of long-term debt 2,997  1,008  3,500  3,290  2,045 
Less: Long-term debt, less current portion 88,564  81,744  75,578  69,537  68,186 
Operating liabilities 32,774  31,173  30,299  29,031  28,861 
 
Net operating assets1 109,116  112,035  114,406  116,548  117,141 
Balance-sheet-based aggregate accruals2 (2,919) (2,371) (2,142) (593) — 
Financial Ratio
Balance-sheet-based accruals ratio3 -2.64% -2.09% -1.85% -0.51%
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
Alphabet Inc. 22.86% 15.42% 17.54% 28.17%
Comcast Corp. -0.48% 1.68% 0.12% 31.76%
Meta Platforms Inc. 14.69% 35.56% 8.16% 27.43%
Netflix Inc. 27.24% 10.12% 37.89% 47.69%
Twitter Inc. 25.82% -14.28% 32.37% 30.55%
Walt Disney Co. 1.73% -4.26% 68.46% 4.72% 6.87%
Balance-Sheet-Based Accruals Ratio, Sector
Media & Entertainment 6.56% 5.00% 17.56% 18.87%
Balance-Sheet-Based Accruals Ratio, Industry
Communication Services 9.21% 6.81% 8.35% 20.64%

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

1 2021 Calculation
Net operating assets = Operating assets – Operating liabilities
= 141,89032,774 = 109,116

2 2021 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2021 – Net operating assets2020
= 109,116112,035 = -2,919

3 2021 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × -2,919 ÷ [(109,116 + 112,035) ÷ 2] = -2.64%

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, Charter Communications Inc. deteriorated earnings quality from 2020 to 2021.

Cash-Flow-Statement-Based Accruals Ratio

Charter Communications Inc., cash flow statement computation of aggregate accruals

US$ in millions

Microsoft Excel
Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Net income attributable to Charter shareholders 4,654  3,222  1,668  1,230  9,895 
Less: Net cash flows from operating activities 16,239  14,562  11,748  11,767  11,954 
Less: Net cash flows from investing activities (7,754) (8,157) (7,331) (9,736) (8,098)
Cash-flow-statement-based aggregate accruals (3,831) (3,183) (2,749) (801) 6,039 
Financial Ratio
Cash-flow-statement-based accruals ratio1 -3.46% -2.81% -2.38% -0.69%
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
Alphabet Inc. 17.48% 8.45% 11.72% 17.73%
Comcast Corp. -0.83% -1.17% 1.21% 24.41%
Meta Platforms Inc. -14.89% 36.04% 4.54% 11.74%
Netflix Inc. 27.32% 4.60% 35.30% 44.39%
Twitter Inc. -19.82% -13.23% 32.30% 66.78%
Walt Disney Co. -0.29% -4.68% 18.72% 5.26% 1.15%
Cash-Flow-Statement-Based Accruals Ratio, Sector
Media & Entertainment 1.32% 2.73% 6.82% 13.79%
Cash-Flow-Statement-Based Accruals Ratio, Industry
Communication Services 5.83% -0.94% 1.88% 10.27%

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

1 2021 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × -3,831 ÷ [(109,116 + 112,035) ÷ 2] = -3.46%

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, Charter Communications Inc. deteriorated earnings quality from 2020 to 2021.