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 27, 2026 | Sep 28, 2025 | Sep 29, 2024 | Sep 24, 2023 | Sep 25, 2022 | Sep 26, 2021 | ||
|---|---|---|---|---|---|---|---|
| Operating Assets | |||||||
| Total assets | 60,829) | 50,143) | 55,154) | 51,040) | 49,014) | 41,240) | |
| Less: Cash and cash equivalents | 4,636) | 5,520) | 7,849) | 8,450) | 2,773) | 7,116) | |
| Less: Restricted cash | —) | 2,323) | —) | —) | —) | —) | |
| Less: Marketable securities | 3,045) | 4,635) | 5,451) | 2,874) | 3,609) | 5,298) | |
| Operating assets | 53,148) | 37,665) | 41,854) | 39,716) | 42,632) | 28,826) | |
| Operating Liabilities | |||||||
| Total liabilities | 30,428) | 28,937) | 28,880) | 29,459) | 31,001) | 31,290) | |
| Less: Short-term debt | 2,492) | —) | 1,364) | 914) | 1,945) | 2,044) | |
| Less: Long-term debt | 12,620) | 14,811) | 13,270) | 14,484) | 13,537) | 13,701) | |
| Operating liabilities | 15,316) | 14,126) | 14,246) | 14,061) | 15,519) | 15,545) | |
| Net operating assets1 | 37,832) | 23,539) | 27,608) | 25,655) | 27,113) | 13,281) | |
| Balance-sheet-based aggregate accruals2 | 14,293) | (4,069) | 1,953) | (1,458) | 13,832) | —) | |
| Financial Ratio | |||||||
| Balance-sheet-based accruals ratio3 | 46.58% | -15.91% | 7.33% | -5.53% | 68.49% | — | |
| 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% | — | |
| Micron Technology Inc. | 52.58% | 14.72% | 5.22% | 0.78% | 12.07% | — | |
| NVIDIA Corp. | 79.34% | 50.16% | 29.90% | 18.88% | 28.31% | — | |
| 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% | 14.29% | 20.95% | 8.85% | 19.02% | — | |
Based on: 10-K (reporting date: 2026-09-27), 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).
1 2026 Calculation
Net operating assets = Operating assets – Operating liabilities
= 53,148 – 15,316 = 37,832
2 2026 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2026 – Net operating assets2025
= 37,832 – 23,539 = 14,293
3 2026 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × 14,293 ÷ [(37,832 + 23,539) ÷ 2] = 46.58%
4 Click competitor name to see calculations.
The financial reporting quality, as measured by balance-sheet-based accruals, exhibits significant volatility over the period from September 2022 to September 2026. The relationship between net operating assets and aggregate accruals shows a fluctuating pattern, characterized by alternating periods of positive and negative accruals, which suggests inconsistent alignment between reported earnings and cash flow movements.
- Net Operating Assets Trend
- Net operating assets remained relatively stable between 2022 and 2025, fluctuating within a range of US$ 23,539 million to US$ 27,608 million. A substantial increase is observed in September 2026, where assets rose to US$ 37,832 million, marking a significant expansion of the operating balance sheet compared to previous years.
- Aggregate Accruals Behavior
- Aggregate accruals demonstrate an erratic trajectory. A high positive value of US$ 13,832 million in 2022 shifted to a negative US$ 1,458 million in 2023. This was followed by a modest positive value of US$ 1,953 million in 2024 and a further decline to negative US$ 4,069 million in 2025. The period concludes with a sharp increase to US$ 14,293 million in 2026.
- Accruals Ratio Interpretation
- The accruals ratio mirrors the underlying volatility of the aggregate accruals. A peak of 68.49% in 2022 indicates that a substantial portion of the reported earnings was derived from non-cash accruals. The ratio shifted to negative territory in 2023 (-5.53%) and 2025 (-15.91%), suggesting intervals where cash flows exceeded reported accrual-based earnings. The cycle ends with a significant increase to 46.58% in 2026, signaling a renewed and substantial divergence between net income and cash flow.
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Cash-Flow-Statement-Based Accruals Ratio
Qualcomm Inc., cash flow statement computation of aggregate accruals
US$ in millions
| Sep 27, 2026 | Sep 28, 2025 | Sep 29, 2024 | Sep 24, 2023 | Sep 25, 2022 | Sep 26, 2021 | ||
|---|---|---|---|---|---|---|---|
| Net income | 13,628) | 5,541) | 10,142) | 7,232) | 12,936) | 9,043) | |
| Less: Net cash provided by operating activities | 11,145) | 14,012) | 12,293) | 11,698) | 9,266) | 10,536) | |
| Less: Net cash used by investing activities | (2,039) | (800) | (3,625) | (621) | (5,804) | (3,356) | |
| Cash-flow-statement-based aggregate accruals | 4,522) | (7,671) | 1,474) | (3,845) | 9,474) | 1,863) | |
| Financial Ratio | |||||||
| Cash-flow-statement-based accruals ratio1 | 14.74% | -30.00% | 5.53% | -14.57% | 46.91% | — | |
| 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% | — | |
| Micron Technology Inc. | 71.82% | 9.37% | 1.18% | -2.52% | 11.37% | — | |
| NVIDIA Corp. | 94.16% | 81.96% | 52.67% | -47.90% | 73.13% | — | |
| 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% | 5.98% | 6.05% | 1.44% | 3.18% | — | |
Based on: 10-K (reporting date: 2026-09-27), 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).
1 2026 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × 4,522 ÷ [(37,832 + 23,539) ÷ 2] = 14.74%
2 Click competitor name to see calculations.
The analysis of aggregate accruals reveals a period of significant volatility in financial reporting quality, characterized by alternating cycles of positive and negative accrual levels relative to net operating assets.
- Net Operating Assets
- Net operating assets demonstrated moderate fluctuations between 2022 and 2025, ranging from a low of 23,539 million USD to a high of 27,608 million USD. A substantial increase is observed in the final period, with assets rising to 37,832 million USD, indicating a significant expansion of the operating balance sheet toward the end of the analyzed timeframe.
- Cash-flow-statement-based Aggregate Accruals
- Aggregate accruals exhibit a highly erratic pattern, shifting from a peak of 9,474 million USD in 2022 to a deficit of 3,845 million USD in 2023. This instability persists through 2025, where a significant negative value of 7,671 million USD is recorded, before returning to a positive 4,522 million USD in 2026. This oscillation suggests inconsistent timing between revenue/expense recognition and actual cash movements.
- Cash-flow-statement-based Accruals Ratio
- The accruals ratio underscores the volatility of earnings quality over the five-year period. A high positive ratio of 46.91% in 2022 suggests that a considerable portion of reported earnings was driven by non-cash accruals. Conversely, the ratio declined to -14.57% in 2023 and reached a low of -30.00% in 2025, indicating periods where cash flow significantly exceeded accounting earnings. The ratio returned to 14.74% by 2026, reflecting a lack of steady-state convergence between cash flows and accrual-based reporting.
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