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.
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Comcast Corp. pages available for free this week:
- Balance Sheet: Assets
- Common-Size Income Statement
- Analysis of Short-term (Operating) Activity Ratios
- Dividend Discount Model (DDM)
- Net Profit Margin since 2005
- Operating Profit Margin since 2005
- Current Ratio since 2005
- Price to Operating Profit (P/OP) since 2005
- Price to Book Value (P/BV) since 2005
- Price to Sales (P/S) since 2005
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Balance-Sheet-Based Accruals Ratio
Comcast Corp., balance sheet computation of aggregate accruals
US$ in millions
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Operating Assets | ||||||
| Total assets | ||||||
| Less: Cash and cash equivalents | ||||||
| Operating assets | ||||||
| Operating Liabilities | ||||||
| Total liabilities | ||||||
| Less: Current portion of debt | ||||||
| Less: Noncurrent portion of debt | ||||||
| Operating liabilities | ||||||
| Net operating assets1 | ||||||
| Balance-sheet-based aggregate accruals2 | ||||||
| Financial Ratio | ||||||
| Balance-sheet-based accruals ratio3 | ||||||
| Benchmarks | ||||||
| Balance-Sheet-Based Accruals Ratio, Competitors4 | ||||||
| Alphabet Inc. | ||||||
| Meta Platforms Inc. | ||||||
| Netflix Inc. | ||||||
| Take-Two Interactive Software Inc. | ||||||
| Walt Disney Co. | ||||||
| Balance-Sheet-Based Accruals Ratio, Sector | ||||||
| Media & Entertainment | ||||||
| Balance-Sheet-Based Accruals Ratio, Industry | ||||||
| Communication Services | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Net operating assets = Operating assets – Operating liabilities
= – =
2 2024 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2024 – Net operating assets2023
= – =
3 2024 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × ÷ [( + ) ÷ 2] =
4 Click competitor name to see calculations.
- Net operating assets
- The net operating assets show a fluctuating yet generally stable trend over the reported periods. Starting at 184,148 million USD in 2021, there is a decline to 172,101 million USD in 2022, followed by a modest increase to 174,342 million USD in 2023 and further growth to 178,046 million USD in 2024. This indicates a reduction in operating assets in 2022, with gradual recovery and expansion in the two later years.
- Balance-sheet-based aggregate accruals
- The aggregate accruals exhibit significant variability across the years. Initially, there is a small negative value of -890 million USD in 2021, which sharply declines to -12,047 million USD in 2022. Subsequently, the figure turns positive to 2,241 million USD in 2023 and increases further to 3,704 million USD in 2024. This dramatic shift from a large negative accrual in 2022 to positive values in the subsequent two years suggests considerable changes in the earnings quality or accounting practices affecting accruals.
- Balance-sheet-based accruals ratio
- The accruals ratio mirrors the pattern observed in the aggregate accruals. It exhibits a noticeable negative peak of -6.76% in 2022, diverging from a minor negative ratio of -0.48% in 2021. The ratio then transitions to positive territory, reaching 1.29% in 2023 and further rising to 2.1% in 2024. This movement from a sizable negative ratio to increasingly positive values could signal an improvement in earnings quality or changes in operational efficiency or accounting methodologies.
Cash-Flow-Statement-Based Accruals Ratio
Comcast Corp., cash flow statement computation of aggregate accruals
US$ in millions
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Net income attributable to Comcast Corporation | ||||||
| Less: Net cash provided by operating activities | ||||||
| Less: Net cash used in investing activities | ||||||
| Cash-flow-statement-based aggregate accruals | ||||||
| Financial Ratio | ||||||
| Cash-flow-statement-based accruals ratio1 | ||||||
| Benchmarks | ||||||
| Cash-Flow-Statement-Based Accruals Ratio, Competitors2 | ||||||
| Alphabet Inc. | ||||||
| Meta Platforms Inc. | ||||||
| Netflix Inc. | ||||||
| Take-Two Interactive Software Inc. | ||||||
| Walt Disney Co. | ||||||
| Cash-Flow-Statement-Based Accruals Ratio, Sector | ||||||
| Media & Entertainment | ||||||
| Cash-Flow-Statement-Based Accruals Ratio, Industry | ||||||
| Communication Services | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × ÷ [( + ) ÷ 2] =
2 Click competitor name to see calculations.
- Net Operating Assets
- The net operating assets experienced a decline from 184,148 million USD in 2021 to 172,101 million USD in 2022, indicating a contraction in asset base. However, this trend reversed thereafter, with an increase to 174,342 million USD in 2023 and further growth to 178,046 million USD in 2024. The data suggest a recovery and gradual expansion of operational asset holdings over the most recent two years.
- Cash-flow-statement-based Aggregate Accruals
- Aggregate accruals were negative in the first three years, starting at -1,541 million USD in 2021 and moving significantly lower to -6,903 million USD in 2022. There was a slight improvement to -5,952 million USD in 2023, yet accruals remained negative. Notably, a marked shift occurred in 2024 with accruals turning positive at 4,189 million USD. This reversal indicates a substantial change in cash flow accrual patterns, suggesting improved cash flow realization relative to earnings.
- Cash-flow-statement-based Accruals Ratio
- The accruals ratio followed a similar trajectory to aggregate accruals. It was negative throughout 2021 to 2023, moving from -0.83% in 2021 down to -3.88% in 2022 and slightly improving to -3.44% in 2023. In 2024, the ratio turned positive at 2.38%, reflecting a notable improvement in the quality of earnings related to cash flow. This positive shift may indicate better earnings sustainability and more conservative accounting practices or improved cash collection.