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
Lam Research Corp., balance sheet computation of aggregate accruals
US$ in thousands
| Jun 29, 2025 | Jun 30, 2024 | Jun 25, 2023 | Jun 26, 2022 | Jun 27, 2021 | Jun 28, 2020 | ||
|---|---|---|---|---|---|---|---|
| Operating Assets | |||||||
| Total assets | 21,345,260) | 18,744,728) | 18,781,643) | 17,195,632) | 15,892,152) | 14,559,047) | |
| Less: Cash and cash equivalents | 6,390,659) | 5,847,856) | 5,337,056) | 3,522,001) | 4,418,263) | 4,915,172) | |
| Operating assets | 14,954,601) | 12,896,872) | 13,444,587) | 13,673,631) | 11,473,889) | 9,643,875) | |
| Operating Liabilities | |||||||
| Total liabilities | 11,483,641) | 10,205,274) | 10,571,471) | 10,917,266) | 9,864,964) | 9,375,558) | |
| Less: Current portion of long-term debt and finance lease obligations | 754,311) | 504,814) | 8,358) | 7,381) | 11,349) | 839,877) | |
| Less: Long-term debt and finance lease obligations, less current portion | 3,730,194) | 4,478,520) | 5,003,183) | 4,998,449) | 4,990,333) | 4,970,848) | |
| Operating liabilities | 6,999,136) | 5,221,940) | 5,559,930) | 5,911,436) | 4,863,282) | 3,564,833) | |
| Net operating assets1 | 7,955,465) | 7,674,932) | 7,884,657) | 7,762,195) | 6,610,607) | 6,079,042) | |
| Balance-sheet-based aggregate accruals2 | 280,533) | (209,725) | 122,462) | 1,151,588) | 531,565) | —) | |
| Financial Ratio | |||||||
| Balance-sheet-based accruals ratio3 | 3.59% | -2.70% | 1.57% | 16.02% | 8.38% | — | |
| Benchmarks | |||||||
| Balance-Sheet-Based Accruals Ratio, Competitors4 | |||||||
| Advanced Micro Devices Inc. | — | 2.94% | 2.36% | 169.75% | 8.05% | — | |
| Analog Devices Inc. | — | -2.83% | 0.03% | -2.94% | 90.70% | -2.85% | |
| Applied Materials Inc. | — | 4.18% | 0.48% | 20.73% | 17.33% | 3.75% | |
| Broadcom Inc. | — | 87.89% | -1.58% | -5.37% | -8.72% | 8.42% | |
| Intel Corp. | — | -0.91% | 13.69% | 10.73% | 11.61% | — | |
| KLA Corp. | 10.15% | -1.32% | 3.95% | 21.25% | 3.62% | — | |
| Micron Technology Inc. | — | 5.22% | 0.78% | 12.07% | 11.51% | 7.56% | |
| NVIDIA Corp. | 50.16% | 29.90% | 18.88% | 28.31% | 115.40% | — | |
| Qualcomm Inc. | — | 7.33% | -5.53% | 68.49% | 22.56% | 20.94% | |
| Texas Instruments Inc. | — | 15.89% | 31.37% | 22.75% | 18.48% | — | |
| Balance-Sheet-Based Accruals Ratio, Sector | |||||||
| Semiconductors & Semiconductor Equipment | 0.00% | 19.65% | 6.33% | 24.66% | 19.53% | — | |
| Balance-Sheet-Based Accruals Ratio, Industry | |||||||
| Information Technology | 0.00% | 21.41% | 8.97% | 18.09% | 19.19% | — | |
Based on: 10-K (reporting date: 2025-06-29), 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-25), 10-K (reporting date: 2022-06-26), 10-K (reporting date: 2021-06-27), 10-K (reporting date: 2020-06-28).
1 2025 Calculation
Net operating assets = Operating assets – Operating liabilities
= 14,954,601 – 6,999,136 = 7,955,465
2 2025 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2025 – Net operating assets2024
= 7,955,465 – 7,674,932 = 280,533
3 2025 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × 280,533 ÷ [(7,955,465 + 7,674,932) ÷ 2] = 3.59%
4 Click competitor name to see calculations.
Cash-Flow-Statement-Based Accruals Ratio
Lam Research Corp., cash flow statement computation of aggregate accruals
US$ in thousands
| Jun 29, 2025 | Jun 30, 2024 | Jun 25, 2023 | Jun 26, 2022 | Jun 27, 2021 | Jun 28, 2020 | ||
|---|---|---|---|---|---|---|---|
| Net income | 5,358,217) | 3,827,772) | 4,510,931) | 4,605,286) | 3,908,458) | 2,251,753) | |
| Less: Net cash provided by operating activities | 6,173,264) | 4,652,269) | 5,178,938) | 3,099,674) | 3,588,163) | 2,126,451) | |
| Less: Net cash (used for) provided by investing activities | (708,092) | (370,614) | (534,562) | 612,275) | 73,271) | (244,084) | |
| Cash-flow-statement-based aggregate accruals | (106,955) | (453,883) | (133,445) | 893,337) | 247,024) | 369,386) | |
| Financial Ratio | |||||||
| Cash-flow-statement-based accruals ratio1 | -1.37% | -5.83% | -1.71% | 12.43% | 3.89% | — | |
| Benchmarks | |||||||
| Cash-Flow-Statement-Based Accruals Ratio, Competitors2 | |||||||
| Advanced Micro Devices Inc. | — | -0.56% | 1.17% | -15.28% | 8.10% | — | |
| Analog Devices Inc. | — | -2.71% | -0.57% | -2.54% | -11.85% | -3.72% | |
| Applied Materials Inc. | — | 5.35% | -2.05% | 18.18% | 14.75% | -0.54% | |
| Broadcom Inc. | — | 10.29% | -6.71% | -8.94% | -12.34% | 3.65% | |
| Intel Corp. | — | -6.58% | 11.35% | 2.75% | 15.15% | — | |
| KLA Corp. | 3.15% | 16.82% | 3.66% | 18.30% | 9.27% | — | |
| Micron Technology Inc. | — | 1.18% | -2.52% | 11.37% | 10.01% | 5.45% | |
| NVIDIA Corp. | 81.96% | 52.67% | -47.90% | 73.13% | 233.25% | — | |
| Qualcomm Inc. | — | 5.53% | -14.57% | 46.91% | 15.61% | 48.48% | |
| Texas Instruments Inc. | — | 7.93% | 26.35% | 28.24% | 29.95% | — | |
| Cash-Flow-Statement-Based Accruals Ratio, Sector | |||||||
| Semiconductors & Semiconductor Equipment | 0.00% | 3.46% | 0.45% | 7.45% | 12.36% | — | |
| Cash-Flow-Statement-Based Accruals Ratio, Industry | |||||||
| Information Technology | 0.00% | 6.30% | 1.47% | 2.90% | 8.62% | — | |
Based on: 10-K (reporting date: 2025-06-29), 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-25), 10-K (reporting date: 2022-06-26), 10-K (reporting date: 2021-06-27), 10-K (reporting date: 2020-06-28).
1 2025 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × -106,955 ÷ [(7,955,465 + 7,674,932) ÷ 2] = -1.37%
2 Click competitor name to see calculations.