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
Micron Technology Inc., balance sheet computation of aggregate accruals
US$ in millions
| Sep 3, 2026 | Aug 28, 2025 | Aug 29, 2024 | Aug 31, 2023 | Sep 1, 2022 | Sep 2, 2021 | ||
|---|---|---|---|---|---|---|---|
| Operating Assets | |||||||
| Total assets | 195,888) | 82,798) | 69,416) | 64,254) | 66,283) | 58,849) | |
| Less: Cash and equivalents | 38,364) | 9,642) | 7,041) | 8,577) | 8,262) | 7,763) | |
| Less: Short-term investments | 5,070) | 665) | 1,065) | 1,017) | 1,069) | 870) | |
| Operating assets | 152,454) | 72,491) | 61,310) | 54,660) | 56,952) | 50,216) | |
| Operating Liabilities | |||||||
| Total liabilities | 57,510) | 28,633) | 24,285) | 20,134) | 16,376) | 14,916) | |
| Less: Current debt | 491) | 560) | 431) | 278) | 103) | 155) | |
| Less: Long-term debt | 4,688) | 14,017) | 12,966) | 13,052) | 6,803) | 6,621) | |
| Operating liabilities | 52,331) | 14,056) | 10,888) | 6,804) | 9,470) | 8,140) | |
| Net operating assets1 | 100,123) | 58,435) | 50,422) | 47,856) | 47,482) | 42,076) | |
| Balance-sheet-based aggregate accruals2 | 41,688) | 8,013) | 2,566) | 374) | 5,406) | —) | |
| Financial Ratio | |||||||
| Balance-sheet-based accruals ratio3 | 52.58% | 14.72% | 5.22% | 0.78% | 12.07% | — | |
| 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% | — | |
| Marvell Technology Inc. | -2.46% | -8.70% | -6.29% | -2.15% | 75.44% | — | |
| 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: 2026-09-03), 10-K (reporting date: 2025-08-28), 10-K (reporting date: 2024-08-29), 10-K (reporting date: 2023-08-31), 10-K (reporting date: 2022-09-01), 10-K (reporting date: 2021-09-02).
1 2026 Calculation
Net operating assets = Operating assets – Operating liabilities
= 152,454 – 52,331 = 100,123
2 2026 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2026 – Net operating assets2025
= 100,123 – 58,435 = 41,688
3 2026 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × 41,688 ÷ [(100,123 + 58,435) ÷ 2] = 52.58%
4 Click competitor name to see calculations.
The analysis reveals a significant escalation in both net operating assets and balance-sheet-based aggregate accruals over the observed period, culminating in a sharp increase in the accruals ratio. While operational assets expanded steadily, the growth in accruals accelerated disproportionately in the final two years of the reporting period.
- Net Operating Assets
- A consistent upward trajectory is observed, with assets increasing from US$ 47,482 million in September 2022 to US$ 100,123 million by September 2026. This steady growth indicates a substantial expansion of the operational base.
- Balance-Sheet-Based Aggregate Accruals
- Aggregate accruals exhibited extreme volatility. A sharp decline occurred between 2022 and 2023, where values dropped from US$ 5,406 million to US$ 374 million. This was followed by a period of rapid acceleration, with accruals rising to US$ 2,566 million in 2024, US$ 8,013 million in 2025, and peaking at US$ 41,688 million in 2026.
- Balance-Sheet-Based Accruals Ratio
- The accruals ratio shows a stark divergence from cash-based earnings quality. The ratio reached a minimum of 0.78% in August 2023, suggesting high reporting quality at that time. However, the ratio subsequently climbed to 5.22% in 2024 and 14.72% in 2025, before spiking to 52.58% in 2026. This exponential increase indicates that a dominant portion of the net operating assets is now comprised of non-cash accruals, which is typically associated with a decrease in the quality of financial reporting and a higher risk of future earnings reversals.
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Cash-Flow-Statement-Based Accruals Ratio
Micron Technology Inc., cash flow statement computation of aggregate accruals
US$ in millions
| Sep 3, 2026 | Aug 28, 2025 | Aug 29, 2024 | Aug 31, 2023 | Sep 1, 2022 | Sep 2, 2021 | ||
|---|---|---|---|---|---|---|---|
| Net income (loss) | 84,969) | 8,539) | 778) | (5,833) | 8,687) | 5,861) | |
| Less: Net cash provided by operating activities | 89,675) | 17,525) | 8,507) | 1,559) | 15,181) | 12,468) | |
| Less: Net cash used for investing activities | (61,641) | (14,087) | (8,309) | (6,191) | (11,585) | (10,589) | |
| Cash-flow-statement-based aggregate accruals | 56,935) | 5,101) | 580) | (1,201) | 5,091) | 3,982) | |
| Financial Ratio | |||||||
| Cash-flow-statement-based accruals ratio1 | 71.82% | 9.37% | 1.18% | -2.52% | 11.37% | — | |
| 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% | — | |
| Marvell Technology Inc. | -7.21% | -13.10% | -10.48% | -5.79% | 17.57% | — | |
| 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: 2026-09-03), 10-K (reporting date: 2025-08-28), 10-K (reporting date: 2024-08-29), 10-K (reporting date: 2023-08-31), 10-K (reporting date: 2022-09-01), 10-K (reporting date: 2021-09-02).
1 2026 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × 56,935 ÷ [(100,123 + 58,435) ÷ 2] = 71.82%
2 Click competitor name to see calculations.
The analysis of financial reporting quality reveals a significant divergence between accrual-based accounting and cash flows, particularly in the final reporting period. While the initial years exhibited relatively stable metrics, the most recent data indicates a sharp increase in both net operating assets and aggregate accruals, suggesting a shift in the company's financial position and earnings quality.
- Net Operating Assets Growth
- Net operating assets remained relatively stable between 2022 and 2024, increasing modestly from US$ 47,482 million to US$ 50,422 million. A notable acceleration occurred in subsequent periods, with assets rising to US$ 58,435 million in 2025 and surging to US$ 100,123 million by September 3, 2026, representing a nearly 111% increase from the 2022 baseline.
- Aggregate Accruals Volatility
- Cash-flow-statement-based aggregate accruals demonstrated significant volatility. The figure shifted from a positive US$ 5,091 million in 2022 to a negative US$ 1,201 million in 2023. After stabilizing at US$ 580 million in 2024 and returning to US$ 5,101 million in 2025, an exponential increase to US$ 56,935 million was recorded in 2026.
- Accruals Ratio and Reporting Quality
- The cash-flow-statement-based accruals ratio reflects these fluctuations, starting at 11.37% in 2022 and dropping to -2.52% in 2023. After remaining low in 2024 (1.18%) and rising slightly in 2025 (9.37%), the ratio spiked to 71.82% in 2026. This extreme elevation indicates a substantial disconnect between reported earnings and actual cash flow, which typically signals a decrease in the quality of financial reporting and an increased reliance on non-cash accounting entries.
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