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.
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Mondelēz International Inc. pages available for free this week:
- Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Profitability Ratios
- Analysis of Solvency Ratios
- Enterprise Value to FCFF (EV/FCFF)
- Capital Asset Pricing Model (CAPM)
- Net Profit Margin since 2005
- Return on Assets (ROA) since 2005
- Current Ratio since 2005
- Debt to Equity since 2005
- Price to Operating Profit (P/OP) since 2005
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Balance-Sheet-Based Accruals Ratio
Mondelēz International Inc., balance sheet computation of aggregate accruals
US$ in millions
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Operating Assets | ||||||
| Total assets | ||||||
| Less: Cash and cash equivalents | ||||||
| Operating assets | ||||||
| Operating Liabilities | ||||||
| Total liabilities | ||||||
| Less: Short-term borrowings | ||||||
| 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 | ||||||
| Coca-Cola Co. | ||||||
| PepsiCo Inc. | ||||||
| Philip Morris International Inc. | ||||||
| Balance-Sheet-Based Accruals Ratio, Sector | ||||||
| Food, Beverage & Tobacco | ||||||
| Balance-Sheet-Based Accruals Ratio, Industry | ||||||
| Consumer Staples | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
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.
The balance-sheet-based accruals ratio exhibited considerable fluctuation over the four-year period. Net operating assets demonstrated a generally decreasing trend, while aggregate accruals displayed significant volatility in both magnitude and sign.
- Net Operating Assets
- Net operating assets decreased from US$47,930 million in 2022 to US$45,964 million in 2023, continuing to US$43,356 million in 2024. A slight increase was observed in 2025, reaching US$44,971 million, but remained below the 2022 level. This suggests a consistent, albeit moderate, contraction in the company’s operating asset base, with a minor recovery in the most recent year.
- Balance-Sheet-Based Aggregate Accruals
- Balance-sheet-based aggregate accruals were positive in 2022 at US$3,641 million, indicating accruals exceeding cash flows from operations. However, accruals became negative in 2023, reaching -US$1,966 million, and further decreased to -US$2,608 million in 2024. A substantial shift occurred in 2025, with accruals turning positive again at US$1,615 million. This pattern suggests a cyclical relationship between accruals and cash flows, with periods of accrual-driven earnings followed by periods where cash flows exceed accruals.
- Balance-Sheet-Based Accruals Ratio
- The accruals ratio mirrored the trend in aggregate accruals. It began at 7.90% in 2022, then decreased to -4.19% in 2023 and -5.84% in 2024. The ratio became positive again in 2025, reaching 3.66%. The negative ratios in 2023 and 2024 indicate that accruals were suppressing reported earnings relative to cash flows during those periods. The return to a positive ratio in 2025 suggests that accruals were again contributing to reported earnings. The magnitude of the ratio decreased substantially from 2022 to 2025, even with the return to positive values.
The volatility in the accruals ratio warrants further investigation. Significant swings in this metric can sometimes signal potential earnings management or changes in accounting practices. The observed pattern suggests a dynamic relationship between reported earnings and underlying cash flows, requiring continued monitoring to assess the sustainability of earnings quality.
Cash-Flow-Statement-Based Accruals Ratio
Mondelēz International Inc., cash flow statement computation of aggregate accruals
US$ in millions
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Net earnings attributable to Mondelēz International | ||||||
| Less: Net cash provided by operating activities | ||||||
| Less: Net cash (used in) provided by investing activities | ||||||
| Cash-flow-statement-based aggregate accruals | ||||||
| Financial Ratio | ||||||
| Cash-flow-statement-based accruals ratio1 | ||||||
| Benchmarks | ||||||
| Cash-Flow-Statement-Based Accruals Ratio, Competitors2 | ||||||
| Coca-Cola Co. | ||||||
| PepsiCo Inc. | ||||||
| Philip Morris International Inc. | ||||||
| Cash-Flow-Statement-Based Accruals Ratio, Sector | ||||||
| Food, Beverage & Tobacco | ||||||
| Cash-Flow-Statement-Based Accruals Ratio, Industry | ||||||
| Consumer Staples | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
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 decreased over the four-year period, from US$47,930 million in 2022 to US$44,971 million in 2025. Concurrent with this decline, cash-flow-statement-based aggregate accruals exhibited a significant shift from positive to negative values, and the cash-flow-statement-based accruals ratio followed a similar trajectory.
- Cash-flow-statement-based Aggregate Accruals
- In 2022, aggregate accruals were US$3,697 million. These accruals then became negative, reaching -US$2,567 million in 2023. The negative trend continued, with accruals of -US$825 million and -US$867 million in 2024 and 2025, respectively. The magnitude of the negative accruals remained relatively stable between 2024 and 2025.
- Cash-flow-statement-based Accruals Ratio
- The accruals ratio began at 8.02% in 2022. A substantial decrease was observed in 2023, with the ratio falling to -5.47%. This negative value persisted in subsequent years, reaching -1.85% in 2024 and -1.96% in 2025. The ratio’s decline moderated between 2023 and 2025, indicating a slowing rate of change.
- Relationship between Net Operating Assets and Accruals
- The decrease in net operating assets appears to coincide with the shift to negative accruals. The initial positive accruals in 2022 may have supported the higher level of net operating assets at that time. The subsequent negative accruals could indicate a reduction in investment or an increase in the write-down of assets, contributing to the decline in net operating assets. Further investigation would be needed to determine the specific drivers of these changes.
The consistent negative accruals ratio over the latter three years warrants further scrutiny. While a negative ratio is not inherently problematic, a sustained negative trend may suggest potential concerns regarding earnings quality or aggressive revenue recognition practices. A deeper dive into the underlying components of accruals is recommended to understand the reasons for this pattern.