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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DoorDash, Inc. pages available for free this week:
- Income Statement
- Balance Sheet: Assets
- Analysis of Liquidity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value (EV)
- Net Profit Margin since 2020
- Operating Profit Margin since 2020
- Current Ratio since 2020
- Price to Earnings (P/E) since 2020
- Price to Book Value (P/BV) since 2020
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Balance-Sheet-Based Accruals Ratio
DoorDash, Inc., 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 | ||||||
| Less: Cash and cash equivalents | ||||||
| Less: Restricted cash | ||||||
| Less: Short-term investments | ||||||
| Operating assets | ||||||
| Operating Liabilities | ||||||
| Total liabilities | ||||||
| Less: Convertible notes, net | ||||||
| Operating liabilities | ||||||
| Net operating assets1 | ||||||
| Balance-sheet-based aggregate accruals2 | ||||||
| Financial Ratio | ||||||
| Balance-sheet-based accruals ratio3 | ||||||
| Benchmarks | ||||||
| Balance-Sheet-Based Accruals Ratio, Competitors4 | ||||||
| Airbnb Inc. | ||||||
| Booking Holdings Inc. | ||||||
| Chipotle Mexican Grill Inc. | ||||||
| McDonald’s Corp. | ||||||
| Starbucks Corp. | ||||||
| Balance-Sheet-Based Accruals Ratio, Sector | ||||||
| Consumer Services | ||||||
| Balance-Sheet-Based Accruals Ratio, Industry | ||||||
| Consumer Discretionary | ||||||
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
= – =
2 2025 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2025 – Net operating assets2024
= – =
3 2025 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.
The balance-sheet-based accruals ratio exhibits significant fluctuations over the observed period. Initial values are high, followed by a substantial decline and eventual return to a level comparable to the beginning of the period.
- Net Operating Assets
- Net operating assets decreased from US$3,247 million in 2022 to US$2,279 million in 2024, before increasing substantially to US$6,991 million in 2025. This indicates a period of asset reduction followed by significant asset growth.
- Balance-Sheet-Based Aggregate Accruals
- Balance-sheet-based aggregate accruals were positive and substantial in 2022 at US$2,337 million. These accruals then became negative in both 2023 and 2024, reaching US$-617 million and US$-351 million respectively. By 2025, accruals turned positive again, reaching US$4,712 million. This pattern suggests a shift in how the company recognizes revenue and expenses relative to cash flows.
- Balance-Sheet-Based Accruals Ratio
- The balance-sheet-based accruals ratio was 112.44% in 2022, indicating that accruals significantly exceeded net operating assets. The ratio then decreased dramatically to -21.00% in 2023 and -14.30% in 2024, suggesting a reversal of prior accrual patterns. In 2025, the ratio rebounded to 101.66%, approaching the level observed in 2022. These fluctuations warrant further investigation to understand the underlying drivers and potential implications for earnings quality. A ratio consistently above 100% may suggest aggressive revenue recognition or delayed expense recognition, while negative values may indicate conservative accounting or expense acceleration. The large swings observed here suggest a dynamic accounting environment.
The substantial changes in aggregate accruals and the resulting accruals ratio suggest potential shifts in the company’s accounting practices or operating cycle. The movement from positive to negative accruals, and back to positive, requires further scrutiny to determine if these changes are related to genuine economic events or potentially opportunistic accounting choices.
Cash-Flow-Statement-Based Accruals Ratio
DoorDash, Inc., cash flow statement computation of aggregate accruals
US$ in millions
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Net income (loss) attributable to DoorDash, Inc. common stockholders | ||||||
| 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 | ||||||
| Airbnb Inc. | ||||||
| Booking Holdings Inc. | ||||||
| Chipotle Mexican Grill Inc. | ||||||
| McDonald’s Corp. | ||||||
| Starbucks Corp. | ||||||
| Cash-Flow-Statement-Based Accruals Ratio, Sector | ||||||
| Consumer Services | ||||||
| Cash-Flow-Statement-Based Accruals Ratio, Industry | ||||||
| Consumer Discretionary | ||||||
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] =
2 Click competitor name to see calculations.
The financial reporting quality, as assessed through cash-flow-statement-based accruals, exhibits a notable shift over the observed period. Net operating assets decreased from US$3,247 million in 2022 to US$2,279 million in 2024 before increasing substantially to US$6,991 million in 2025. Concurrent with this asset trend, cash-flow-statement-based aggregate accruals transitioned from negative values to a positive value over the period.
- Cash-Flow-Statement-Based Aggregate Accruals
- Cash-flow-statement-based aggregate accruals were negative from 2022 through 2024, registering US$-1,432 million, US$-1,889 million, and US$-1,565 million respectively. This indicates that, during these years, the company’s reported net income exceeded its net cash flow from operations. However, in 2025, these accruals became positive, reaching US$2,895 million, suggesting net cash flow from operations exceeded reported net income. The magnitude of the shift is considerable.
- Cash-Flow-Statement-Based Accruals Ratio
- The cash-flow-statement-based accruals ratio demonstrates a consistent negative trend from 2022 to 2024, moving from -68.90% to -63.76%. This suggests a decreasing reliance on accruals to inflate reported earnings relative to cash flows during this period, although the values remained substantially negative. A dramatic reversal occurs in 2025, with the ratio increasing to 62.46%. This indicates a significant increase in the proportion of reported earnings derived from accruals rather than cash flows. The substantial change in 2025 warrants further investigation to understand the underlying drivers.
The progression from consistently negative accruals and accruals ratios to positive values in 2025 is a key observation. This shift could be attributable to changes in working capital management, accounting policy adjustments, or fundamental alterations in the company’s business model. The substantial increase in both aggregate accruals and the accruals ratio in 2025 suggests a potential area for deeper scrutiny regarding the quality of earnings.