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
Qualcomm Inc., balance sheet computation of aggregate accruals
US$ in millions
| Sep 28, 2025 | Sep 29, 2024 | Sep 24, 2023 | Sep 25, 2022 | Sep 26, 2021 | Sep 27, 2020 | ||
|---|---|---|---|---|---|---|---|
| Operating Assets | |||||||
| Total assets | 50,143) | 55,154) | 51,040) | 49,014) | 41,240) | 35,594) | |
| Less: Cash and cash equivalents | 5,520) | 7,849) | 8,450) | 2,773) | 7,116) | 6,707) | |
| Less: Restricted cash | 2,323) | —) | —) | —) | —) | —) | |
| Less: Marketable securities | 4,635) | 5,451) | 2,874) | 3,609) | 5,298) | 4,507) | |
| Operating assets | 37,665) | 41,854) | 39,716) | 42,632) | 28,826) | 24,380) | |
| Operating Liabilities | |||||||
| Total liabilities | 28,937) | 28,880) | 29,459) | 31,001) | 31,290) | 29,517) | |
| Less: Short-term debt | —) | 1,364) | 914) | 1,945) | 2,044) | 500) | |
| Less: Long-term debt | 14,811) | 13,270) | 14,484) | 13,537) | 13,701) | 15,226) | |
| Operating liabilities | 14,126) | 14,246) | 14,061) | 15,519) | 15,545) | 13,791) | |
| Net operating assets1 | 23,539) | 27,608) | 25,655) | 27,113) | 13,281) | 10,589) | |
| Balance-sheet-based aggregate accruals2 | (4,069) | 1,953) | (1,458) | 13,832) | 2,692) | —) | |
| Financial Ratio | |||||||
| Balance-sheet-based accruals ratio3 | -15.91% | 7.33% | -5.53% | 68.49% | 22.56% | — | |
| Benchmarks | |||||||
| Balance-Sheet-Based Accruals Ratio, Competitors4 | |||||||
| Advanced Micro Devices Inc. | — | 2.94% | 2.36% | 169.75% | 8.05% | — | |
| Analog Devices Inc. | -4.14% | -2.83% | 0.03% | -2.94% | 90.70% | — | |
| Applied Materials Inc. | — | 4.18% | 0.48% | 20.73% | 17.33% | 3.75% | |
| Broadcom Inc. | — | 87.89% | -1.58% | -5.37% | -8.72% | 8.42% | |
| Intel Corp. | — | -0.91% | 13.69% | 10.73% | 11.61% | — | |
| KLA Corp. | 10.15% | -1.32% | 3.95% | 21.25% | 3.62% | — | |
| Lam Research Corp. | 3.59% | -2.70% | 1.57% | 16.02% | 8.38% | — | |
| Micron Technology Inc. | 14.72% | 5.22% | 0.78% | 12.07% | 11.51% | — | |
| NVIDIA Corp. | 50.16% | 29.90% | 18.88% | 28.31% | 115.40% | — | |
| Texas Instruments Inc. | — | 15.89% | 31.37% | 22.75% | 18.48% | — | |
| Balance-Sheet-Based Accruals Ratio, Sector | |||||||
| Semiconductors & Semiconductor Equipment | 0.00% | 19.65% | 6.33% | 24.66% | 19.53% | — | |
| Balance-Sheet-Based Accruals Ratio, Industry | |||||||
| Information Technology | 0.00% | 21.35% | 8.92% | 18.19% | 19.59% | — | |
Based on: 10-K (reporting date: 2025-09-28), 10-K (reporting date: 2024-09-29), 10-K (reporting date: 2023-09-24), 10-K (reporting date: 2022-09-25), 10-K (reporting date: 2021-09-26), 10-K (reporting date: 2020-09-27).
1 2025 Calculation
Net operating assets = Operating assets – Operating liabilities
= 37,665 – 14,126 = 23,539
2 2025 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2025 – Net operating assets2024
= 23,539 – 27,608 = -4,069
3 2025 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × -4,069 ÷ [(23,539 + 27,608) ÷ 2] = -15.91%
4 Click competitor name to see calculations.
- Net Operating Assets
- The net operating assets demonstrated a generally increasing trend from 2021 through 2024, starting at 13,281 million US dollars in 2021 and rising sharply to 27,113 million US dollars in 2022. After this peak, net operating assets decreased slightly to 25,655 million in 2023 but increased again in 2024 to 27,608 million. However, a notable decline occurred in 2025, where net operating assets fell to 23,539 million US dollars, indicating a contraction in operating asset base towards the end of the observed period.
- Balance-sheet-based Aggregate Accruals
- Aggregate accruals showed considerable volatility over the reported periods. They increased dramatically from 2,692 million US dollars in 2021 to a peak of 13,832 million in 2022. Thereafter, a reversal took place in 2023, with aggregate accruals turning negative at -1,458 million, suggesting a significant change in the recognition of revenues or expenses. This was followed by moderate positive accruals in 2024 at 1,953 million and a return to negative accruals in 2025, reaching -4,069 million, indicating fluctuations in the accrual components of earnings which may impact earnings quality.
- Balance-sheet-based Accruals Ratio
- The accruals ratio exhibited a similar pattern of volatility and trend reversals. Starting at 22.56% in 2021, it surged to 68.49% in 2022, reflecting a high proportion of accruals relative to net operating assets during that year. The ratio then dropped sharply to -5.53% in 2023, indicating a predominance of negative accruals. It slightly increased to 7.33% in 2024 before falling more significantly to -15.91% in 2025. These fluctuations suggest variability in earnings composition with respect to cash and non-cash components, which could imply variations in financial reporting quality over the analyzed timeframe.
Cash-Flow-Statement-Based Accruals Ratio
Qualcomm Inc., cash flow statement computation of aggregate accruals
US$ in millions
| Sep 28, 2025 | Sep 29, 2024 | Sep 24, 2023 | Sep 25, 2022 | Sep 26, 2021 | Sep 27, 2020 | ||
|---|---|---|---|---|---|---|---|
| Net income | 5,541) | 10,142) | 7,232) | 12,936) | 9,043) | 5,198) | |
| Less: Net cash provided by operating activities | 14,012) | 12,293) | 11,698) | 9,266) | 10,536) | 5,814) | |
| Less: Net cash used by investing activities | (800) | (3,625) | (621) | (5,804) | (3,356) | (5,263) | |
| Cash-flow-statement-based aggregate accruals | (7,671) | 1,474) | (3,845) | 9,474) | 1,863) | 4,647) | |
| Financial Ratio | |||||||
| Cash-flow-statement-based accruals ratio1 | -30.00% | 5.53% | -14.57% | 46.91% | 15.61% | — | |
| Benchmarks | |||||||
| Cash-Flow-Statement-Based Accruals Ratio, Competitors2 | |||||||
| Advanced Micro Devices Inc. | — | -0.56% | 1.17% | -15.28% | 8.10% | — | |
| Analog Devices Inc. | -3.09% | -2.71% | -0.57% | -2.54% | -11.85% | — | |
| Applied Materials Inc. | — | 5.35% | -2.05% | 18.18% | 14.75% | -0.54% | |
| Broadcom Inc. | — | 10.29% | -6.71% | -8.94% | -12.34% | 3.65% | |
| Intel Corp. | — | -6.58% | 11.35% | 2.75% | 15.15% | — | |
| KLA Corp. | 3.15% | 16.82% | 3.66% | 18.30% | 9.27% | — | |
| Lam Research Corp. | -1.37% | -5.83% | -1.71% | 12.43% | 3.89% | — | |
| Micron Technology Inc. | 9.37% | 1.18% | -2.52% | 11.37% | 10.01% | — | |
| NVIDIA Corp. | 81.96% | 52.67% | -47.90% | 73.13% | 233.25% | — | |
| Texas Instruments Inc. | — | 7.93% | 26.35% | 28.24% | 29.95% | — | |
| Cash-Flow-Statement-Based Accruals Ratio, Sector | |||||||
| Semiconductors & Semiconductor Equipment | 0.00% | 3.46% | 0.45% | 7.45% | 12.36% | — | |
| Cash-Flow-Statement-Based Accruals Ratio, Industry | |||||||
| Information Technology | 0.00% | 6.25% | 1.40% | 2.99% | 8.76% | — | |
Based on: 10-K (reporting date: 2025-09-28), 10-K (reporting date: 2024-09-29), 10-K (reporting date: 2023-09-24), 10-K (reporting date: 2022-09-25), 10-K (reporting date: 2021-09-26), 10-K (reporting date: 2020-09-27).
1 2025 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × -7,671 ÷ [(23,539 + 27,608) ÷ 2] = -30.00%
2 Click competitor name to see calculations.
- Net Operating Assets
- The net operating assets exhibited a substantial increase from 13,281 million US dollars in 2021 to a peak of 27,113 million in 2022. Following this peak, a slight decline occurred to 25,655 million in 2023, with a modest recovery to 27,608 million in 2024. By 2025, there was a notable decrease to 23,539 million. Overall, the trend reflects considerable growth initially, followed by volatility and a downward adjustment in the most recent period.
- Cash-flow-statement-based Aggregate Accruals
- The aggregate accruals showed significant fluctuations over the analyzed periods. Beginning at a positive 1,863 million US dollars in 2021, the figure surged sharply to 9,474 million in 2022, indicating increased accrual activity. However, this was followed by a steep reversal to negative 3,845 million in 2023, a rebound to positive 1,474 million in 2024, and a subsequent substantial drop to negative 7,671 million in 2025. This pattern suggests high variability in accrual accounting adjustments and potential concerns regarding the stability of accruals.
- Cash-flow-statement-based Accruals Ratio
- The accruals ratio corresponded closely with the aggregate accrual movements. Starting at 15.61% in 2021, it escalated sharply to 46.91% in 2022, indicating a high proportion of accruals relative to cash flow. In 2023, the ratio turned negative to -14.57%, signaling a reversal in accruals impact. It then moved back to a moderate positive value of 5.53% in 2024, before dropping markedly to -30.00% in 2025. The volatility in this ratio emphasizes considerable fluctuations in the quality and reliability of earnings as related to cash flows.
- Overall Observations
- The analyzed data reveals a pattern of considerable volatility in key financial reporting quality measures over the reported periods. The initial growth in net operating assets and accrual-related figures in 2022 contrasts with subsequent declines and negative reversals. The wide swings in both the aggregate accruals and accruals ratio suggest instability in accrual accounting practices, which may impact the interpretability and reliability of reported earnings relative to cash flows. This pronounced variability warrants cautious assessment of the company’s earnings quality and financial health over time.