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
Marvell Technology Inc., balance sheet computation of aggregate accruals
US$ in thousands
| Jan 31, 2026 | Feb 1, 2025 | Feb 3, 2024 | Jan 28, 2023 | Jan 29, 2022 | Jan 30, 2021 | ||
|---|---|---|---|---|---|---|---|
| Operating Assets | |||||||
| Total assets | 22,285,300) | 20,204,500) | 21,228,500) | 22,522,100) | 22,108,597) | 10,764,924) | |
| Less: Cash and cash equivalents | 2,638,800) | 948,300) | 950,800) | 911,000) | 613,533) | 748,467) | |
| Operating assets | 19,646,500) | 19,256,200) | 20,277,700) | 21,611,100) | 21,495,064) | 10,016,457) | |
| Operating Liabilities | |||||||
| Total liabilities | 7,976,900) | 6,777,500) | 6,397,100) | 6,884,900) | 6,406,500) | 2,329,120) | |
| Less: Short-term debt | 499,800) | 129,500) | 107,300) | 584,400) | 63,166) | 199,641) | |
| Less: Long-term debt | 3,970,800) | 3,934,300) | 4,058,600) | 3,907,700) | 4,484,811) | 993,170) | |
| Operating liabilities | 3,506,300) | 2,713,700) | 2,231,200) | 2,392,800) | 1,858,523) | 1,136,309) | |
| Net operating assets1 | 16,140,200) | 16,542,500) | 18,046,500) | 19,218,300) | 19,636,541) | 8,880,148) | |
| Balance-sheet-based aggregate accruals2 | (402,300) | (1,504,000) | (1,171,800) | (418,241) | 10,756,393) | —) | |
| Financial Ratio | |||||||
| Balance-sheet-based accruals ratio3 | -2.46% | -8.70% | -6.29% | -2.15% | 75.44% | — | |
| Benchmarks | |||||||
| Balance-Sheet-Based Accruals Ratio, Competitors4 | |||||||
| Advanced Micro Devices Inc. | — | 2.75% | 2.94% | 2.36% | 169.75% | — | |
| Analog Devices Inc. | — | -4.14% | -2.83% | 0.03% | -2.94% | 90.70% | |
| Applied Materials Inc. | — | 15.26% | 4.18% | 0.48% | 20.73% | 17.33% | |
| Broadcom Inc. | — | 3.40% | 87.89% | -1.58% | -5.37% | -8.72% | |
| Intel Corp. | — | 1.90% | -0.91% | 13.69% | 10.73% | — | |
| KLA Corp. | 18.67% | 10.15% | -1.32% | 3.95% | 21.25% | — | |
| Lam Research Corp. | 28.75% | 3.59% | -2.70% | 1.57% | 16.02% | — | |
| Micron Technology Inc. | — | 14.72% | 5.22% | 0.78% | 12.07% | 11.51% | |
| NVIDIA Corp. | 79.34% | 50.16% | 29.90% | 18.88% | 28.31% | — | |
| Qualcomm Inc. | — | -15.91% | 7.33% | -5.53% | 68.49% | 22.56% | |
| Texas Instruments Inc. | — | 10.43% | 15.89% | 31.37% | 22.75% | — | |
| Balance-Sheet-Based Accruals Ratio, Sector | |||||||
| Semiconductors & Semiconductor Equipment | 0.00% | 6.08% | 18.65% | 5.94% | 26.65% | — | |
| Balance-Sheet-Based Accruals Ratio, Industry | |||||||
| Information Technology | 0.00% | 14.20% | 20.88% | 8.81% | 19.09% | — | |
Based on: 10-K (reporting date: 2026-01-31), 10-K (reporting date: 2025-02-01), 10-K (reporting date: 2024-02-03), 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30).
1 2026 Calculation
Net operating assets = Operating assets – Operating liabilities
= 19,646,500 – 3,506,300 = 16,140,200
2 2026 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2026 – Net operating assets2025
= 16,140,200 – 16,542,500 = -402,300
3 2026 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × -402,300 ÷ [(16,140,200 + 16,542,500) ÷ 2] = -2.46%
4 Click competitor name to see calculations.
The financial data reveals a significant shift in the relationship between operating assets and accruals over the five-year period ending January 31, 2026. A primary observation is the transition from high positive accruals to a sustained period of negative accruals, indicating a fundamental change in the composition of the company's operating balance sheet relative to its reported earnings.
- Net Operating Assets Trend
- Net operating assets demonstrated a consistent decline throughout the analyzed period. The value decreased from 19.64 billion US dollars in January 2022 to 16.14 billion US dollars by January 2026, representing a steady reduction in the capital tied up in operating activities.
- Aggregate Accruals Volatility
- Balance-sheet-based aggregate accruals experienced a sharp reversal after January 2022. A high positive balance of 10.76 billion US dollars shifted to a negative balance of 418.24 million US dollars by January 2023. This negative trend intensified through February 2025, reaching a peak negative value of 1.50 billion US dollars, before moderating to 402.3 million US dollars in January 2026.
- Accruals Ratio and Earnings Quality
- The balance-sheet-based accruals ratio plummeted from 75.44% in 2022 to -2.15% in 2023. The ratio continued to deteriorate, reaching its lowest point of -8.70% in February 2025, before recovering to -2.46% in January 2026. The transition from a high positive ratio to consistently negative ratios suggests a shift toward higher earnings quality, as negative accruals generally indicate that cash flows from operations are exceeding reported accrual-based earnings.
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Cash-Flow-Statement-Based Accruals Ratio
Marvell Technology Inc., cash flow statement computation of aggregate accruals
US$ in thousands
| Jan 31, 2026 | Feb 1, 2025 | Feb 3, 2024 | Jan 28, 2023 | Jan 29, 2022 | Jan 30, 2021 | ||
|---|---|---|---|---|---|---|---|
| Net income (loss) | 2,670,100) | (885,000) | (933,400) | (163,500) | (421,034) | (277,298) | |
| Less: Net cash provided by operating activities | 1,750,500) | 1,681,200) | 1,370,500) | 1,288,800) | 819,368) | 817,287) | |
| Less: Net cash (used in) provided by investing activities | 2,097,800) | (300,700) | (350,500) | (328,400) | (3,745,130) | (119,644) | |
| Cash-flow-statement-based aggregate accruals | (1,178,200) | (2,265,500) | (1,953,400) | (1,123,900) | 2,504,728) | (974,941) | |
| Financial Ratio | |||||||
| Cash-flow-statement-based accruals ratio1 | -7.21% | -13.10% | -10.48% | -5.79% | 17.57% | — | |
| Benchmarks | |||||||
| Cash-Flow-Statement-Based Accruals Ratio, Competitors2 | |||||||
| Advanced Micro Devices Inc. | — | 8.55% | -0.56% | 1.17% | -15.28% | — | |
| Analog Devices Inc. | — | -3.09% | -2.71% | -0.57% | -2.54% | -11.85% | |
| Applied Materials Inc. | — | 10.66% | 5.35% | -2.05% | 18.18% | 14.75% | |
| Broadcom Inc. | — | -2.99% | 10.29% | -6.71% | -8.94% | -12.34% | |
| Intel Corp. | — | 3.62% | -6.58% | 11.35% | 2.75% | — | |
| KLA Corp. | 27.99% | 3.15% | 16.82% | 3.66% | 18.30% | — | |
| Lam Research Corp. | 25.08% | -1.37% | -5.83% | -1.71% | 12.43% | — | |
| Micron Technology Inc. | — | 9.37% | 1.18% | -2.52% | 11.37% | 10.01% | |
| NVIDIA Corp. | 94.16% | 81.96% | 52.67% | -47.90% | 73.13% | — | |
| Qualcomm Inc. | — | -30.00% | 5.53% | -14.57% | 46.91% | 15.61% | |
| Texas Instruments Inc. | — | -2.95% | 7.93% | 26.35% | 28.24% | — | |
| Cash-Flow-Statement-Based Accruals Ratio, Sector | |||||||
| Semiconductors & Semiconductor Equipment | 0.00% | 5.52% | 2.92% | 0.17% | 7.85% | — | |
| 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: 2026-01-31), 10-K (reporting date: 2025-02-01), 10-K (reporting date: 2024-02-03), 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30).
1 2026 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × -1,178,200 ÷ [(16,140,200 + 16,542,500) ÷ 2] = -7.21%
2 Click competitor name to see calculations.
The financial data indicates a consistent reduction in net operating assets alongside a significant shift in the nature of aggregate accruals over the five-year period ending January 31, 2026. While the company began the period with positive accruals, there was a transition to sustained negative accruals starting in 2023, suggesting a fundamental change in the relationship between reported earnings and cash flow.
- Net Operating Assets Trend
- A steady downward trajectory is observed in net operating assets, which declined from 19.6 billion USD in 2022 to 16.1 billion USD in 2026. This consistent contraction represents a total reduction of approximately 17.8% over the analyzed period, indicating a shrinking base of operating assets relative to the company's scale.
- Aggregate Accruals Analysis
- Cash-flow-statement-based aggregate accruals shifted from a positive 2.5 billion USD in 2022 to negative values for four consecutive years. The negative accruals intensified through 2025, reaching a peak deficit of 2.27 billion USD, before moderating to 1.18 billion USD in 2026. This transition suggests that in later years, cash flows from operations exceeded accrual-based accounting earnings.
- Accruals Ratio Interpretation
- The cash-flow-statement-based accruals ratio exhibits high volatility, moving from 17.57% in 2022 to a low of -13.10% in 2025. The initial positive ratio in 2022 indicated that a portion of the earnings was not yet realized as cash. However, the subsequent shift to negative ratios indicates an increase in earnings quality from a cash-flow perspective, as the negative values imply that reported earnings were lower than the actual cash generated from operations.
- Reporting Quality Implications
- The trend from a positive accruals ratio to a sustained negative ratio generally reflects a shift toward more conservative financial reporting. The peak negative ratio in 2025 suggests a period where cash generation significantly outpaced accrual-based profit recognition, followed by a partial normalization in 2026 as the ratio returned to -7.21%.
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