Financial Reporting Quality: Aggregate Accruals
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
Comcast Corp., balance sheet computation of aggregate accruals
US$ in millions
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Operating Assets | ||||||
| Total assets | 272,631) | 266,211) | 264,811) | 257,275) | 275,905) | |
| Less: Cash and cash equivalents | 9,481) | 7,322) | 6,215) | 4,749) | 8,711) | |
| Operating assets | 263,150) | 258,889) | 258,596) | 252,526) | 267,194) | |
| Operating Liabilities | ||||||
| Total liabilities | 175,256) | 179,936) | 181,344) | 175,236) | 177,896) | |
| Less: Current portion of debt | 5,958) | 4,907) | 2,069) | 1,743) | 2,132) | |
| Less: Noncurrent portion of debt | 92,979) | 94,186) | 95,021) | 93,068) | 92,718) | |
| Operating liabilities | 76,319) | 80,843) | 84,254) | 80,425) | 83,046) | |
| Net operating assets1 | 186,831) | 178,046) | 174,342) | 172,101) | 184,148) | |
| Balance-sheet-based aggregate accruals2 | 8,785) | 3,704) | 2,241) | (12,047) | —) | |
| Financial Ratio | ||||||
| Balance-sheet-based accruals ratio3 | 4.82% | 2.10% | 1.29% | -6.76% | — | |
| Benchmarks | ||||||
| Balance-Sheet-Based Accruals Ratio, Competitors4 | ||||||
| Alphabet Inc. | 32.21% | 26.92% | 17.24% | 21.43% | — | |
| Meta Platforms Inc. | 37.11% | 22.82% | 11.12% | 20.95% | — | |
| Netflix Inc. | 4.06% | 9.36% | -3.78% | 14.21% | — | |
| Trade Desk Inc. | 13.91% | 26.91% | 15.86% | 16.20% | — | |
| Walt Disney Co. | 3.76% | 0.01% | 0.08% | 3.09% | 1.73% | |
| Balance-Sheet-Based Accruals Ratio, Sector | ||||||
| Media & Entertainment | 20.86% | 13.42% | 6.82% | 7.78% | — | |
| Balance-Sheet-Based Accruals Ratio, Industry | ||||||
| Communication Services | 12.92% | 6.15% | 4.26% | -3.76% | — | |
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
Net operating assets = Operating assets – Operating liabilities
= 263,150 – 76,319 = 186,831
2 2025 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2025 – Net operating assets2024
= 186,831 – 178,046 = 8,785
3 2025 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × 8,785 ÷ [(186,831 + 178,046) ÷ 2] = 4.82%
4 Click competitor name to see calculations.
The balance-sheet-based accruals ratio exhibits a notable shift over the observed period. Initially negative, the ratio transitions to positive values, demonstrating an increasing trend in aggregate accruals relative to net operating assets.
- Net Operating Assets
- Net operating assets demonstrate consistent growth throughout the period, increasing from US$172,101 million in 2022 to US$186,831 million in 2025. This indicates a steady expansion of the company’s operational footprint.
- Balance-Sheet-Based Aggregate Accruals
- Balance-sheet-based aggregate accruals were negative in 2022, at US$-12,047 million, suggesting a reduction in non-cash assets or an increase in liabilities relative to cash flows. However, accruals become positive in subsequent years, reaching US$8,785 million in 2025. This represents a substantial reversal and a growing accumulation of non-cash assets or deferred expenses.
- Balance-Sheet-Based Accruals Ratio
- The balance-sheet-based accruals ratio began at -6.76% in 2022, indicating that accruals significantly offset operating assets. The ratio then moved to 1.29% in 2023, signifying a decrease in the offsetting effect. Further increases are observed in 2024 (2.10%) and 2025 (4.82%), demonstrating a progressively larger proportion of operating assets being accounted for by accruals. This upward trend warrants further investigation to determine the underlying drivers and potential implications for earnings quality.
The increasing accruals ratio, coupled with growing net operating assets, suggests a potential shift in the company’s financial reporting characteristics. While not inherently negative, the trend merits scrutiny to assess whether the increasing accruals are sustainable and reflective of genuine economic activity or indicative of potential earnings management.
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Cash-Flow-Statement-Based Accruals Ratio
Comcast Corp., cash flow statement computation of aggregate accruals
US$ in millions
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Net income attributable to Comcast Corporation | 19,998) | 16,192) | 15,388) | 5,370) | 14,159) | |
| Less: Net cash provided by operating activities | 33,643) | 27,673) | 28,501) | 26,413) | 29,146) | |
| Less: Net cash used in investing activities | (16,157) | (15,670) | (7,161) | (14,140) | (13,446) | |
| Cash-flow-statement-based aggregate accruals | 2,512) | 4,189) | (5,952) | (6,903) | (1,541) | |
| Financial Ratio | ||||||
| Cash-flow-statement-based accruals ratio1 | 1.38% | 2.38% | -3.44% | -3.88% | — | |
| Benchmarks | ||||||
| Cash-Flow-Statement-Based Accruals Ratio, Competitors2 | ||||||
| Alphabet Inc. | 30.01% | 9.42% | -0.52% | -7.90% | — | |
| Meta Platforms Inc. | 28.28% | 15.08% | -7.43% | 1.96% | — | |
| Netflix Inc. | -0.67% | 12.03% | -8.44% | 16.73% | — | |
| Trade Desk Inc. | -23.25% | -20.85% | -42.93% | -30.87% | — | |
| Walt Disney Co. | 1.58% | -1.46% | -1.97% | 1.50% | -0.29% | |
| Cash-Flow-Statement-Based Accruals Ratio, Sector | ||||||
| Media & Entertainment | 16.91% | 6.38% | -3.21% | -1.72% | — | |
| Cash-Flow-Statement-Based Accruals Ratio, Industry | ||||||
| Communication Services | 9.45% | 2.36% | -2.49% | -1.32% | — | |
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × 2,512 ÷ [(186,831 + 178,046) ÷ 2] = 1.38%
2 Click competitor name to see calculations.
The analysis reveals a notable shift in cash-flow-statement-based accruals over the four-year period. Initially, aggregate accruals were negative, but transitioned to positive values before stabilizing. This is reflected in the accruals ratio, which demonstrates a similar pattern.
- Net Operating Assets
- Net operating assets exhibited a consistent upward trend throughout the period, increasing from US$172,101 million in 2022 to US$186,831 million in 2025. This indicates overall growth in the company’s operational investments and resources.
- Cash-Flow-Statement-Based Aggregate Accruals
- Cash-flow-statement-based aggregate accruals were negative in 2022 and 2023, registering at -US$6,903 million and -US$5,952 million respectively. This suggests that, during these years, net income exceeded cash flow from operations. However, accruals became positive in 2024, reaching US$4,189 million, and remained positive in 2025 at US$2,512 million. This indicates a reversal, where cash flow from operations exceeded net income in those years.
- Cash-Flow-Statement-Based Accruals Ratio
- The cash-flow-statement-based accruals ratio mirrored the trend in aggregate accruals. It was -3.88% in 2022 and -3.44% in 2023, indicating a substantial negative accrual component relative to net operating assets. A significant positive shift occurred in 2024, with the ratio reaching 2.38%, and it further moderated to 1.38% in 2025. The positive ratios in the later years suggest an increasing reliance on cash generation from operations relative to reported earnings. The magnitude of the ratio decreased from 2024 to 2025, indicating a stabilization of the relationship between accruals and net operating assets.
The transition from negative to positive accruals and the corresponding change in the accruals ratio warrant further investigation. While negative accruals can sometimes indicate earnings quality concerns, the subsequent shift to positive accruals may suggest improved cash flow management or a change in accounting practices. The stabilization of the accruals ratio in 2025 could indicate a more sustainable relationship between reported earnings and underlying cash flows.
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