Stock Analysis on Net
Stock Analysis on Net
Microsoft Excel LibreOffice Calc

Cisco Systems Inc. (NASDAQ:CSCO)

Financial Reporting Quality: Aggregate Accruals

Advanced level

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

Cisco Systems Inc., balance sheet computation of aggregate accruals

US$ in millions

Microsoft Excel LibreOffice Calc
Jul 25, 2020 Jul 27, 2019 Jul 28, 2018 Jul 29, 2017 Jul 30, 2016 Jul 25, 2015
Operating Assets
Total assets 94,853  97,793  108,784  129,818  121,652  113,481 
Less: Cash and cash equivalents 11,809  11,750  8,934  11,708  7,631  6,877 
Less: Investments 17,610  21,663  37,614  58,784  58,125  53,539 
Operating assets 65,434  64,380  62,236  59,326  55,896  53,065 
Operating Liabilities
Total liabilities 56,933  64,222  65,580  63,681  58,067  53,774 
Less: Short-term debt 3,005  10,191  5,238  7,992  4,160  3,897 
Less: Long-term debt, excluding current portion 11,578  14,475  20,331  25,725  24,483  21,457 
Operating liabilities 42,350  39,556  40,011  29,964  29,424  28,420 
 
Net operating assets1 23,084  24,824  22,225  29,362  26,472  24,645 
Balance-sheet-based aggregate accruals2 (1,740) 2,599  (7,137) 2,890  1,827 
Financial Ratio
Balance-sheet-based accruals ratio3 -7.26% 11.05% -27.67% 10.35% 7.15%
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
Advanced Micro Devices Inc. 28.39% 49.43% 33.24% -57.87%
Analog Devices Inc. 0.29% -2.75% 142.61% -2.62%
Apple Inc. -45.28% -12.22% 16.94% 4.07% 15.49%
Applied Materials Inc. 19.87% 9.56% 7.98% -5.41% 7.76%
Broadcom Inc. 27.77% 29.77% -9.33% 130.30% -4.39%
Intel Corp. 4.20% 8.12% 9.37% 23.70%
Lam Research Corp. 12.45% -6.77% 10.60% 0.89% -0.62%
Micron Technology Inc. 11.13% 20.96% 30.97% 7.49% 22.20%
NVIDIA Corp. -16.93% 49.27% 28.14% 61.57% -23.52%
Qualcomm Inc. 48.90% -98.54% -47.48% -0.74% 14.83%
Texas Instruments Inc. -5.28% -1.17% -6.30% -2.39%
Balance-Sheet-Based Accruals Ratio, Sector
Technology Hardware & Equipment 0.00% -7.52% -3.20% 12.59% 14.99%
Balance-Sheet-Based Accruals Ratio, Industry
Technology 0.00% 6.22% 2.01% 12.50% 10.58%

Based on: 10-K (filing date: 2020-09-03), 10-K (filing date: 2019-09-05), 10-K (filing date: 2018-09-06), 10-K (filing date: 2017-09-07), 10-K (filing date: 2016-09-08), 10-K (filing date: 2015-09-08).

1 2020 Calculation
Net operating assets = Operating assets – Operating liabilities
= 65,43442,350 = 23,084

2 2020 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2020 – Net operating assets2019
= 23,08424,824 = -1,740

3 2020 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × -1,740 ÷ [(23,084 + 24,824) ÷ 2] = -7.26%

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, Cisco Systems Inc. improved earnings quality from 2019 to 2020.

Cash-Flow-Statement-Based Accruals Ratio

Cisco Systems Inc., cash flow statement computation of aggregate accruals

US$ in millions

Microsoft Excel LibreOffice Calc
Jul 25, 2020 Jul 27, 2019 Jul 28, 2018 Jul 29, 2017 Jul 30, 2016 Jul 25, 2015
Net income 11,214  11,621  110  9,609  10,739  8,981 
Less: Net cash provided by operating activities 15,426  15,831  13,666  13,876  13,570  12,552 
Less: Net cash (used in) provided by investing activities 3,500  14,837  15,324  (5,993) (8,117) (10,088)
Cash-flow-statement-based aggregate accruals (7,712) (19,047) (28,880) 1,726  5,286  6,517 
Financial Ratio
Cash-flow-statement-based accruals ratio1 -32.20% -80.97% -111.97% 6.18% 20.68%
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
Advanced Micro Devices Inc. -0.19% 43.37% 12.64% -103.39%
Analog Devices Inc. -3.61% -3.78% 62.93% 27.75%
Apple Inc. -47.40% -20.53% 19.28% 17.80% 21.52%
Applied Materials Inc. -1.09% -13.49% 33.14% -4.57% 7.15%
Broadcom Inc. 18.25% 23.21% -13.51% 23.89% -10.19%
Intel Corp. 2.52% 3.32% 4.12% 21.28%
Lam Research Corp. 9.16% 16.67% -78.67% 47.67% -28.43%
Micron Technology Inc. 9.74% 17.59% 20.50% -2.12% 25.48%
NVIDIA Corp. -225.09% 143.36% -83.66% 57.83% -15.08%
Qualcomm Inc. -30.37% -127.94% -102.91% 7.18% 14.30%
Texas Instruments Inc. 3.01% -15.48% -5.40% -3.44%
Cash-Flow-Statement-Based Accruals Ratio, Sector
Technology Hardware & Equipment 0.00% -16.81% -17.25% 7.05% 15.20%
Cash-Flow-Statement-Based Accruals Ratio, Industry
Technology 0.00% -8.33% -12.73% 14.50% 15.81%

Based on: 10-K (filing date: 2020-09-03), 10-K (filing date: 2019-09-05), 10-K (filing date: 2018-09-06), 10-K (filing date: 2017-09-07), 10-K (filing date: 2016-09-08), 10-K (filing date: 2015-09-08).

1 2020 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × -7,712 ÷ [(23,084 + 24,824) ÷ 2] = -32.20%

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, Cisco Systems Inc. improved earnings quality from 2019 to 2020.