Stock Analysis on Net
Stock Analysis on Net
Microsoft Excel LibreOffice Calc

Lam Research Corp. (NASDAQ:LRCX)

Financial Reporting Quality: Aggregate Accruals

Advanced level

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

Microsoft Excel LibreOffice Calc
Jun 28, 2020 Jun 30, 2019 Jun 24, 2018 Jun 25, 2017 Jun 26, 2016 Jun 28, 2015
Operating Assets
Total assets 14,559,047  12,001,333  12,479,478  12,122,765  12,271,528  9,364,648 
Less: Cash and cash equivalents 4,915,172  3,658,219  4,512,257  2,377,534  5,039,322  1,501,539 
Less: Investments 1,795,080  1,772,984  437,338  3,663,628  1,788,612  2,574,947 
Operating assets 7,848,795  6,570,130  7,529,883  6,081,603  5,443,594  5,288,162 
Operating Liabilities
Total liabilities 9,375,558  7,278,029  5,899,435  5,135,453  6,169,459  4,019,696 
Less: Current portion of convertible notes and finance leases 839,877  667,131  610,030  908,439  949,494  1,359,650 
Less: Senior notes, convertible notes, and finance leases, less current portion 4,970,848  3,822,768  1,806,562  1,784,974  3,383,581  1,001,382 
Operating liabilities 3,564,833  2,788,130  3,482,843  2,442,040  1,836,384  1,658,664 
 
Net operating assets1 4,283,962  3,782,000  4,047,040  3,639,563  3,607,210  3,629,498 
Balance-sheet-based aggregate accruals2 501,962  (265,040) 407,477  32,353  (22,288)
Financial Ratio
Balance-sheet-based accruals ratio3 12.45% -6.77% 10.60% 0.89% -0.62%
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
Advanced Micro Devices Inc. 28.39% 49.43% 33.24% -57.87%
Analog Devices Inc. 0.29% -2.75% 142.61% -2.62%
Apple Inc. -45.28% -12.22% 16.94% 4.07% 15.49%
Applied Materials Inc. 19.87% 9.56% 7.98% -5.41% 7.76%
Broadcom Inc. 27.77% 29.77% -9.33% 130.30% -4.39%
Cisco Systems Inc. -7.26% 11.05% -27.67% 10.35% 7.15%
Intel Corp. 4.20% 8.12% 9.37% 23.70%
Micron Technology Inc. 11.13% 20.96% 30.97% 7.49% 22.20%
NVIDIA Corp. -16.93% 49.27% 28.14% 61.57% -23.52%
Qualcomm Inc. 48.90% -98.54% -47.48% -0.74% 14.83%
Texas Instruments Inc. -5.28% -1.17% -6.30% -2.39%
Balance-Sheet-Based Accruals Ratio, Sector
Technology Hardware & Equipment 0.00% -7.52% -3.20% 12.59% 14.99%
Balance-Sheet-Based Accruals Ratio, Industry
Technology 0.00% 6.22% 2.01% 12.50% 10.58%

Based on: 10-K (filing date: 2020-08-18), 10-K (filing date: 2019-08-20), 10-K (filing date: 2018-08-14), 10-K (filing date: 2017-08-15), 10-K (filing date: 2016-08-17), 10-K (filing date: 2015-08-13).

1 2020 Calculation
Net operating assets = Operating assets – Operating liabilities
= 7,848,7953,564,833 = 4,283,962

2 2020 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2020 – Net operating assets2019
= 4,283,9623,782,000 = 501,962

3 2020 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × 501,962 ÷ [(4,283,962 + 3,782,000) ÷ 2] = 12.45%

4 Click competitor name to see calculations.

Financial ratio Description The company
Balance-sheet-based accruals ratio Ratio is found by dividing balance-sheet-based aggregate accruals by average net operating assets. Using the balance-sheet-based accruals ratio, Lam Research Corp. deteriorated earnings quality from 2019 to 2020.

Cash-Flow-Statement-Based Accruals Ratio

Lam Research Corp., cash flow statement computation of aggregate accruals

US$ in thousands

Microsoft Excel LibreOffice Calc
Jun 28, 2020 Jun 30, 2019 Jun 24, 2018 Jun 25, 2017 Jun 26, 2016 Jun 28, 2015
Net income 2,251,753  2,191,430  2,380,681  1,697,763  914,049  655,577 
Less: Net cash provided by operating activities 2,126,451  3,176,013  2,655,747  2,029,282  1,350,277  785,503 
Less: Net cash (used for) provided by investing activities (244,084) (1,637,054) 2,748,440  (2,058,613) 592,483  (1,106,096)
Cash-flow-statement-based aggregate accruals 369,386  652,471  (3,023,506) 1,727,094  (1,028,711) 976,170 
Financial Ratio
Cash-flow-statement-based accruals ratio1 9.16% 16.67% -78.67% 47.67% -28.43%
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
Advanced Micro Devices Inc. -0.19% 43.37% 12.64% -103.39%
Analog Devices Inc. -3.61% -3.78% 62.93% 27.75%
Apple Inc. -47.40% -20.53% 19.28% 17.80% 21.52%
Applied Materials Inc. -1.09% -13.49% 33.14% -4.57% 7.15%
Broadcom Inc. 18.25% 23.21% -13.51% 23.89% -10.19%
Cisco Systems Inc. -32.20% -80.97% -111.97% 6.18% 20.68%
Intel Corp. 2.52% 3.32% 4.12% 21.28%
Micron Technology Inc. 9.74% 17.59% 20.50% -2.12% 25.48%
NVIDIA Corp. -225.09% 143.36% -83.66% 57.83% -15.08%
Qualcomm Inc. -30.37% -127.94% -102.91% 7.18% 14.30%
Texas Instruments Inc. 3.01% -15.48% -5.40% -3.44%
Cash-Flow-Statement-Based Accruals Ratio, Sector
Technology Hardware & Equipment 0.00% -16.81% -17.25% 7.05% 15.20%
Cash-Flow-Statement-Based Accruals Ratio, Industry
Technology 0.00% -8.33% -12.73% 14.50% 15.81%

Based on: 10-K (filing date: 2020-08-18), 10-K (filing date: 2019-08-20), 10-K (filing date: 2018-08-14), 10-K (filing date: 2017-08-15), 10-K (filing date: 2016-08-17), 10-K (filing date: 2015-08-13).

1 2020 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × 369,386 ÷ [(4,283,962 + 3,782,000) ÷ 2] = 9.16%

2 Click competitor name to see calculations.

Financial ratio Description The company
Cash-flow-statement-based accruals ratio Ratio is found by dividing cash-flow-statement-based aggregate accruals by average net operating assets. Using the cash-flow-statement-based accruals ratio, Lam Research Corp. improved earnings quality from 2019 to 2020.