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
Intuit Inc., balance sheet computation of aggregate accruals
US$ in millions
| Jul 31, 2026 | Jul 31, 2025 | Jul 31, 2024 | Jul 31, 2023 | Jul 31, 2022 | Jul 31, 2021 | ||
|---|---|---|---|---|---|---|---|
| Operating Assets | |||||||
| Total assets | 36,786) | 36,958) | 32,132) | 27,780) | 27,734) | 15,516) | |
| Less: Cash and cash equivalents | 4,705) | 2,884) | 3,609) | 2,848) | 2,796) | 2,562) | |
| Less: Investments | 2,495) | 1,668) | 465) | 814) | 485) | 1,308) | |
| Operating assets | 29,586) | 32,406) | 28,058) | 24,118) | 24,453) | 11,646) | |
| Operating Liabilities | |||||||
| Total liabilities | 17,794) | 17,248) | 13,696) | 10,511) | 11,293) | 5,647) | |
| Less: Short-term debt | 1,249) | —) | 499) | —) | 499) | —) | |
| Less: Long-term debt | 6,420) | 5,973) | 5,539) | 6,120) | 6,415) | 2,034) | |
| Operating liabilities | 10,125) | 11,275) | 7,658) | 4,391) | 4,379) | 3,613) | |
| Net operating assets1 | 19,461) | 21,131) | 20,400) | 19,727) | 20,074) | 8,033) | |
| Balance-sheet-based aggregate accruals2 | (1,670) | 731) | 673) | (347) | 12,041) | —) | |
| Financial Ratio | |||||||
| Balance-sheet-based accruals ratio3 | -8.23% | 3.52% | 3.35% | -1.74% | 85.68% | — | |
| Benchmarks | |||||||
| Balance-Sheet-Based Accruals Ratio, Competitors4 | |||||||
| Accenture PLC | — | 2.83% | 35.69% | 16.32% | 21.70% | 27.93% | |
| Adobe Inc. | — | -5.28% | -3.83% | 1.85% | -8.24% | 14.14% | |
| AppLovin Corp. | — | -20.02% | -0.63% | -1.52% | 36.28% | — | |
| Cadence Design Systems Inc. | — | 9.47% | 39.84% | 11.17% | 26.65% | — | |
| Datadog Inc. | — | 53.88% | -28.51% | -35.73% | 17.56% | — | |
| International Business Machines Corp. | — | 16.28% | 2.79% | 2.42% | 1.55% | — | |
| Microsoft Corp. | 33.11% | 21.81% | 52.18% | 22.96% | 42.27% | — | |
| Oracle Corp. | 34.01% | 20.79% | 4.30% | 51.77% | 9.90% | — | |
| Palantir Technologies Inc. | — | 509.21% | — | — | — | — | |
| Palo Alto Networks Inc. | 136.74% | 32.24% | 89.91% | 137.01% | -124.73% | — | |
| Salesforce Inc. | 13.74% | 0.71% | -2.46% | -2.30% | 57.74% | — | |
| ServiceNow Inc. | — | 41.98% | 22.91% | 61.79% | 12.89% | — | |
| Synopsys Inc. | — | 154.48% | 7.85% | 13.85% | 5.01% | 0.36% | |
| Workday Inc. | 28.83% | 20.74% | 28.44% | -11.24% | 55.93% | — | |
| Balance-Sheet-Based Accruals Ratio, Sector | |||||||
| Software & Services | 0.00% | 21.91% | 26.12% | 18.31% | 29.53% | — | |
| Balance-Sheet-Based Accruals Ratio, Industry | |||||||
| Information Technology | 0.00% | 14.20% | 20.88% | 8.81% | 19.09% | — | |
Based on: 10-K (reporting date: 2026-07-31), 10-K (reporting date: 2025-07-31), 10-K (reporting date: 2024-07-31), 10-K (reporting date: 2023-07-31), 10-K (reporting date: 2022-07-31), 10-K (reporting date: 2021-07-31).
1 2026 Calculation
Net operating assets = Operating assets – Operating liabilities
= 29,586 – 10,125 = 19,461
2 2026 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2026 – Net operating assets2025
= 19,461 – 21,131 = -1,670
3 2026 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × -1,670 ÷ [(19,461 + 21,131) ÷ 2] = -8.23%
4 Click competitor name to see calculations.
The financial reporting quality, as measured by balance-sheet-based accruals, exhibits a significant transition from a high-accrual environment to a more cash-aligned earnings profile over the analyzed period. While net operating assets remained relatively stable, the aggregate accruals experienced substantial volatility, resulting in a dramatic contraction of the accruals ratio between 2022 and 2026.
- Net Operating Assets
- Net operating assets demonstrated consistent stability, fluctuating within a narrow range between 19,461 million US dollars and 21,131 million US dollars. This consistency indicates a stable operational asset base throughout the five-year window.
- Balance-sheet-based Aggregate Accruals
- A sharp decline is observed in aggregate accruals, which fell from a peak of 12,041 million US dollars in 2022 to -347 million US dollars in 2023. Following a period of modest positive values in 2024 and 2025, the figure shifted to -1,670 million US dollars by 2026, indicating a reversal in the relationship between accrual-based earnings and cash flows.
- Balance-sheet-based Accruals Ratio
- The accruals ratio underwent a significant normalization process. The elevated ratio of 85.68% in 2022 suggests that a substantial portion of reported earnings was driven by non-cash accounting entries. This shifted abruptly to -1.74% in 2023 and remained low through 2025, before reaching -8.23% in 2026. The transition from a high positive ratio to a negative ratio indicates an improvement in earnings quality, as reported earnings became more closely aligned with, or were exceeded by, cash flows.
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Cash-Flow-Statement-Based Accruals Ratio
Intuit Inc., cash flow statement computation of aggregate accruals
US$ in millions
| Jul 31, 2026 | Jul 31, 2025 | Jul 31, 2024 | Jul 31, 2023 | Jul 31, 2022 | Jul 31, 2021 | ||
|---|---|---|---|---|---|---|---|
| Net income | 4,566) | 3,869) | 2,963) | 2,384) | 2,066) | 2,062) | |
| Less: Net cash provided by operating activities | 8,838) | 6,207) | 4,884) | 5,046) | 3,889) | 3,250) | |
| Less: Net cash used in investing activities | (1,412) | (2,318) | (227) | (922) | (5,421) | (3,965) | |
| Cash-flow-statement-based aggregate accruals | (2,860) | (20) | (1,694) | (1,740) | 3,598) | 2,777) | |
| Financial Ratio | |||||||
| Cash-flow-statement-based accruals ratio1 | -14.09% | -0.10% | -8.44% | -8.74% | 25.60% | — | |
| Benchmarks | |||||||
| Cash-Flow-Statement-Based Accruals Ratio, Competitors2 | |||||||
| Accenture PLC | — | -6.95% | 24.31% | -0.19% | 11.87% | 11.80% | |
| Adobe Inc. | — | -14.85% | -21.90% | -21.73% | -19.93% | 9.21% | |
| AppLovin Corp. | — | -27.29% | -10.24% | -15.40% | 22.07% | — | |
| Cadence Design Systems Inc. | — | -3.48% | 17.36% | 3.78% | 15.03% | — | |
| Datadog Inc. | — | 206.67% | 30.92% | 53.36% | -34.44% | — | |
| International Business Machines Corp. | — | 10.47% | -3.73% | 0.99% | -7.22% | — | |
| Microsoft Corp. | 22.28% | 12.55% | 30.89% | 5.22% | 13.42% | — | |
| Oracle Corp. | 29.14% | 13.98% | -1.01% | 42.79% | -30.58% | — | |
| Palantir Technologies Inc. | — | 2,593.23% | — | — | — | — | |
| Palo Alto Networks Inc. | -7.34% | -8.91% | 33.84% | -37.95% | -196.64% | — | |
| Salesforce Inc. | 1.74% | -6.66% | -8.44% | -8.49% | 21.96% | — | |
| ServiceNow Inc. | — | -29.72% | -7.12% | 15.44% | 8.80% | — | |
| Synopsys Inc. | — | 71.60% | -7.64% | 0.20% | -4.64% | -4.88% | |
| Workday Inc. | -55.17% | -4.25% | 34.56% | 18.64% | -0.65% | — | |
| Cash-Flow-Statement-Based Accruals Ratio, Sector | |||||||
| Software & Services | 0.00% | 10.54% | 12.11% | 7.33% | 2.29% | — | |
| Cash-Flow-Statement-Based Accruals Ratio, Industry | |||||||
| Information Technology | 0.00% | 5.89% | 5.99% | 1.37% | 3.25% | — | |
Based on: 10-K (reporting date: 2026-07-31), 10-K (reporting date: 2025-07-31), 10-K (reporting date: 2024-07-31), 10-K (reporting date: 2023-07-31), 10-K (reporting date: 2022-07-31), 10-K (reporting date: 2021-07-31).
1 2026 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × -2,860 ÷ [(19,461 + 21,131) ÷ 2] = -14.09%
2 Click competitor name to see calculations.
An analysis of the financial reporting quality from July 31, 2022, to July 31, 2026, reveals a significant shift in the relationship between accrual-based earnings and cash flows.
- Net Operating Assets Performance
- Net operating assets exhibited relative stability throughout the period, fluctuating between a low of US$ 19,461 million in 2026 and a peak of US$ 21,131 million in 2025. The lack of drastic volatility in this base figure suggests a consistent asset structure relative to the company's operational scale.
- Aggregate Accruals Trend
- A marked transition is observed in cash-flow-statement-based aggregate accruals. The period began with a high positive value of US$ 3,598 million in 2022, which shifted abruptly to negative values starting in 2023. Following a near-neutral position of US$ -20 million in 2025, accruals declined sharply to US$ -2,860 million by 2026.
- Accruals Ratio Analysis
- The cash-flow-statement-based accruals ratio reflects this volatility, moving from 25.60% in 2022 to negative territory for the subsequent four years. The ratio stabilized between -8.74% and -8.44% during 2023 and 2024, converged toward zero (-0.10%) in 2025, and reached a period low of -14.09% in 2026. This trajectory indicates a movement from a state where earnings were significantly higher than cash flows to a state where cash flows consistently exceeded accrual earnings.
The shift toward a negative accruals ratio over the majority of the analyzed timeframe suggests an improvement in the quality of earnings, as the negative values typically indicate a more conservative accounting posture where cash flow provides strong support for reported financial performance.
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