Ross Stores Inc. (NASDAQ:ROST)

Net Operating Assets

The net operating assets exhibit an overall increase from February 3, 2018, through February 1, 2020, rising from approximately 2.16 billion to about 2.32 billion US dollars. However, a significant decline occurs in the following period ending January 30, 2021, where the net operating assets drop sharply to approximately 984 million US dollars. A partial recovery is observed in the final period ending January 29, 2022, with assets increasing to around 1.59 billion US dollars, yet this remains below prior peak levels.

Balance-Sheet-Based Aggregate Accruals

The aggregate accruals display considerable volatility over the periods. Initially, they decrease significantly from about 123 million US dollars in 2018 to roughly 50 million in 2019, before increasing again to approximately 116 million in 2020. A marked reversal occurs in 2021, with accruals turning negative and reaching nearly -1.34 billion US dollars. The final period in 2022 shows a positive rebound to approximately 606 million US dollars, indicating high variability in accruals over time.

Balance-Sheet-Based Accruals Ratio

The accruals ratio decreases from 5.85% in 2018 to a lower level of 2.28% in 2019, then rises again to 5.11% in 2020, mirroring the pattern in aggregate accruals. A drastic decline occurs in 2021, with the ratio turning substantially negative to -80.87%, reflecting the sharp negative accruals and the diminished net operating assets. In 2022, there is a notable recovery to 47.05%, although this remains a high and unusual level relative to prior years, suggesting considerable changes in accruals relative to net operating assets.

The data presents a review of several financial measures over a five-year period. The focus is on net operating assets, cash-flow-statement-based aggregate accruals, and the cash-flow-statement-based accruals ratio.

Net Operating Assets

This figure shows an overall increase from 2,155,469 thousand US dollars in 2018 to a peak of 2,320,935 thousand in 2020, indicating growth in operational asset base during the initial years. However, there is a sharp decline in 2021 to 984,432 thousand, which is less than half of the 2020 value, followed by a partial recovery to 1,590,010 thousand in 2022. The significant drop in 2021 suggests a major change in asset utilization or a dispossession event.

Cash-flow-statement-based Aggregate Accruals

The aggregate accruals exhibit substantial volatility across the years. The values ranged positively from 34,567 thousand in 2018 to 44,348 thousand in 2020, but with notable negative values appearing in 2019 (-68,811 thousand) and 2021 (-1,755,118 thousand). The magnitude of the negative accrual in 2021 is particularly drastic, signaling a significant adjustment or anomaly in the accrual accounting for that year. An extremely high positive adjustment occurs in 2022, with 541,580 thousand accrued, indicating a possible reversal or correction in the accrual process.

Cash-flow-statement-based Accruals Ratio

This ratio mirrors the fluctuations seen in aggregate accruals, moving from small positive percentages in 2018 (1.65%) and 2020 (1.96%) to a negative percentage in 2019 (-3.16%). The ratio then changes drastically to a large negative value in 2021 (-106.2%), followed by an equally dramatic positive figure of 42.07% in 2022. These extreme swings point to significant distortions in the accruals' relationship to cash flow in these years, raising concerns about the consistency and quality of earnings during this period.

Overall, the data reveals considerable instability in the financial reporting quality measures over the five-year period, particularly marked by the anomalies in 2021. The sharp deviations in both net operating assets and cash-flow-based accruals components suggest potential irregularities or one-time events affecting earnings quality and asset valuation. Such patterns warrant further investigation into the underlying causes to understand their impact on the company's financial health and reporting reliability.