Stock Analysis on Net

NVIDIA Corp. (NASDAQ:NVDA)

Financial Reporting Quality: Aggregate Accruals

Microsoft Excel LibreOffice Calc

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

NVIDIA Corp., balance sheet computation of aggregate accruals

US$ in millions

Microsoft Excel LibreOffice Calc
Jan 31, 2021 Jan 26, 2020 Jan 27, 2019 Jan 28, 2018 Jan 29, 2017 Jan 31, 2016
Operating Assets
Total assets 28,791  17,315  13,292  11,241  9,841  7,370 
Less: Cash and cash equivalents 847  10,896  782  4,002  1,766  596 
Less: Marketable securities 10,714  6,640  3,106  5,032  4,441 
Operating assets 17,230  6,418  5,870  4,133  3,043  2,333 
Operating Liabilities
Total liabilities 11,898  5,111  3,950  3,770  4,048  2,814 
Less: Short-term debt 999  —  —  15  796  1,413 
Less: Long-term debt 5,964  1,991  1,988  1,985  1,983  — 
Less: Capital lease obligations, long-term —  —  —  —  10 
Operating liabilities 4,935  3,120  1,962  1,770  1,263  1,391 
 
Net operating assets1 12,295  3,298  3,908  2,363  1,780  942 
Balance-sheet-based aggregate accruals2 8,997  (610) 1,545  583  838  — 
Financial Ratio
Balance-sheet-based accruals ratio3 115.40% -16.93% 49.27% 28.14% 61.57%
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
Advanced Micro Devices Inc. 72.69% 28.39% 49.43% 33.24%
Applied Materials Inc. 17.33% 3.75% 19.87% 9.56% 7.98%
Broadcom Inc. -8.72% 8.42% 27.77% 29.77% -9.33%
Intel Corp. 0.01% 4.20% 8.12% 9.37%
Lam Research Corp. 21.20% 12.45% -6.77% 10.60% 0.89%
Micron Technology Inc. 11.51% 7.56% 11.13% 20.96% 30.97%
Qualcomm Inc. 22.56% 20.94% 48.90% -98.54% -47.48%
Texas Instruments Inc. 1.00% -5.28% -1.17% -6.30%
Balance-Sheet-Based Accruals Ratio, Sector
Semiconductors & Semiconductor Equipment 0.00% 5.27% 13.05% 8.29% 200.00%
Balance-Sheet-Based Accruals Ratio, Industry
Information Technology 0.00% 1.59% 21.19% -3.14% 200.00%

Based on: 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-01-26), 10-K (reporting date: 2019-01-27), 10-K (reporting date: 2018-01-28), 10-K (reporting date: 2017-01-29), 10-K (reporting date: 2016-01-31).

1 2021 Calculation
Net operating assets = Operating assets – Operating liabilities
= 17,2304,935 = 12,295

2 2021 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2021 – Net operating assets2020
= 12,2953,298 = 8,997

3 2021 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × 8,997 ÷ [(12,295 + 3,298) ÷ 2] = 115.40%

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, NVIDIA Corp. deteriorated earnings quality from 2020 to 2021.

Cash-Flow-Statement-Based Accruals Ratio

NVIDIA Corp., cash flow statement computation of aggregate accruals

US$ in millions

Microsoft Excel LibreOffice Calc
Jan 31, 2021 Jan 26, 2020 Jan 27, 2019 Jan 28, 2018 Jan 29, 2017 Jan 31, 2016
Net income 4,332  2,796  4,141  3,047  1,666  614 
Less: Net cash provided by operating activities 5,822  4,761  3,743  3,502  1,672  1,175 
Less: Net cash (used in) provided by investing activities (19,675) 6,145  (4,097) 1,278  (793) (400)
Cash-flow-statement-based aggregate accruals 18,185  (8,110) 4,495  (1,733) 787  (161)
Financial Ratio
Cash-flow-statement-based accruals ratio1 233.25% -225.09% 143.36% -83.66% 57.83%
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
Advanced Micro Devices Inc. 83.38% -0.19% 43.37% 12.64%
Applied Materials Inc. 14.75% -0.54% -1.09% -13.49% 33.14%
Broadcom Inc. -12.34% 3.65% 18.25% 23.21% -13.51%
Intel Corp. 6.75% 2.52% 3.32% 4.12%
Lam Research Corp. 5.16% 9.16% 16.67% -78.67% 47.67%
Micron Technology Inc. 10.01% 5.45% 9.74% 17.59% 20.50%
Qualcomm Inc. 15.61% 48.48% -30.37% -127.94% -102.91%
Texas Instruments Inc. 4.03% 3.01% -15.48% -5.40%
Cash-Flow-Statement-Based Accruals Ratio, Sector
Semiconductors & Semiconductor Equipment 0.00% 4.41% 8.40% -2.25% -14.46%
Cash-Flow-Statement-Based Accruals Ratio, Industry
Information Technology 0.00% -6.37% -6.35% -17.80% 19.83%

Based on: 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-01-26), 10-K (reporting date: 2019-01-27), 10-K (reporting date: 2018-01-28), 10-K (reporting date: 2017-01-29), 10-K (reporting date: 2016-01-31).

1 2021 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × 18,185 ÷ [(12,295 + 3,298) ÷ 2] = 233.25%

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, NVIDIA Corp. deteriorated earnings quality from 2020 to 2021.