Stock Analysis on Net
Stock Analysis on Net

KLA Corp. (NASDAQ:KLAC)

$24.99

Financial Reporting Quality: Aggregate Accruals

Microsoft Excel

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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Balance-Sheet-Based Accruals Ratio

KLA Corp., balance sheet computation of aggregate accruals

US$ in thousands

Microsoft Excel
Jun 30, 2025 Jun 30, 2024 Jun 30, 2023 Jun 30, 2022 Jun 30, 2021 Jun 30, 2020
Operating Assets
Total assets
Less: Cash and cash equivalents
Less: Marketable securities
Operating assets
Operating Liabilities
Total liabilities
Less: Short-term debt
Less: Current portion of long-term debt
Less: Long-term debt, excluding current portion
Operating liabilities
 
Net operating assets1
Balance-sheet-based aggregate accruals2
Financial Ratio
Balance-sheet-based accruals ratio3
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
Advanced Micro Devices Inc.
Analog Devices Inc.
Applied Materials Inc.
Broadcom Inc.
Intel Corp.
Lam Research Corp.
Micron Technology Inc.
NVIDIA Corp.
Qualcomm Inc.
Texas Instruments Inc.
Balance-Sheet-Based Accruals Ratio, Sector
Semiconductors & Semiconductor Equipment
Balance-Sheet-Based Accruals Ratio, Industry
Information Technology

Based on: 10-K (reporting date: 2025-06-30), 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30).

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.

Net operating assets
The net operating assets exhibit an overall upward trend over the reported periods. Starting at approximately 4.32 billion USD in mid-2021, the value increased significantly to about 5.35 billion USD by mid-2022. Subsequent periods show a moderate growth to 5.57 billion USD in 2023, followed by a slight decline in 2024 to approximately 5.49 billion USD. The most recent figure indicates a rebound to 6.08 billion USD in 2025, representing the highest level within the timeframe.
Balance-sheet-based aggregate accruals
This measure displays considerable volatility throughout the five-year horizon. Initially recorded at approximately 154 million USD in 2021, it surged to over 1 billion USD in 2022, marking a substantial increase. The following year saw a sharp decrease to around 216 million USD, and a further shift into negative territory in 2024 with approximately -72.9 million USD, indicating a reversal in accruals. In 2025, the value returned to a positive 588 million USD, suggesting a partial recovery from the previous year's negative accruals.
Balance-sheet-based accruals ratio
The accruals ratio mirrors the volatility observed in aggregate accruals, fluctuating widely over the periods. Starting from a moderate 3.62% in 2021, it climbed sharply to 21.25% in 2022, signaling increased accrual activity relative to net operating assets. The subsequent period showed a decline to 3.95%, followed by a notable negative ratio of -1.32% in 2024, consistent with the negative aggregate accruals observed. The ratio then rose again to 10.15% in 2025, reflecting a partial normalization though still elevated compared to earlier periods.

Cash-Flow-Statement-Based Accruals Ratio

KLA Corp., cash flow statement computation of aggregate accruals

US$ in thousands

Microsoft Excel
Jun 30, 2025 Jun 30, 2024 Jun 30, 2023 Jun 30, 2022 Jun 30, 2021 Jun 30, 2020
Net income attributable to KLA
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
Advanced Micro Devices Inc.
Analog Devices Inc.
Applied Materials Inc.
Broadcom Inc.
Intel Corp.
Lam Research Corp.
Micron Technology Inc.
NVIDIA Corp.
Qualcomm Inc.
Texas Instruments Inc.
Cash-Flow-Statement-Based Accruals Ratio, Sector
Semiconductors & Semiconductor Equipment
Cash-Flow-Statement-Based Accruals Ratio, Industry
Information Technology

Based on: 10-K (reporting date: 2025-06-30), 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30).

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.

Net Operating Assets
The net operating assets exhibit a general upward trend over the observed periods. Starting at 4,323,887 thousand US dollars in mid-2021, there was a significant increase in mid-2022 to 5,351,800 thousand US dollars. This was followed by a more moderate rise to 5,567,330 thousand in mid-2023 and a slight decline to 5,494,468 thousand in mid-2024. The trend resumed its upward momentum by mid-2025, reaching 6,082,087 thousand US dollars. This pattern indicates steady growth in net operating assets over the five-year span, with a minor contraction between 2023 and 2024.
Cash-Flow-Statement-Based Aggregate Accruals
The aggregate accruals based on the cash-flow statement demonstrate notable fluctuations. The value started at 393,670 thousand US dollars in mid-2021 and more than doubled to 885,563 thousand by mid-2022. A sharp decrease followed in mid-2023, dropping to 200,043 thousand, succeeded by another increase to 930,306 thousand in mid-2024. By mid-2025, the figure again decreased considerably to 182,221 thousand US dollars. These pronounced variations suggest volatility in the accruals, which could reflect changing operational efficiency or shifts in accounting practices.
Cash-Flow-Statement-Based Accruals Ratio
The accruals ratio, expressed as a percentage, fluctuates broadly in alignment with the aggregate accruals data. It commenced at 9.27% in mid-2021, rose substantially to 18.3% in mid-2022, dropped significantly to 3.66% in mid-2023, then surged again to 16.82% in mid-2024, followed by a decline to 3.15% in mid-2025. This pattern indicates inconsistent accruals quality relative to operating cash flows, with alternating periods of higher and lower accruals impact, suggesting variability in earnings quality across the years.