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.
Paying user area
Try for free
SolarEdge Technologies Inc. pages available for free this week:
- Analysis of Liquidity Ratios
- Analysis of Solvency Ratios
- Common Stock Valuation Ratios
- Present Value of Free Cash Flow to Equity (FCFE)
- Net Profit Margin since 2015
- Return on Assets (ROA) since 2015
- Price to Earnings (P/E) since 2015
- Price to Operating Profit (P/OP) since 2015
- Price to Sales (P/S) since 2015
- Analysis of Debt
The data is hidden behind: . Unhide it.
Get full access to the entire website from $10.42/mo, or
get 1-month access to SolarEdge Technologies Inc. for $22.49.
This is a one-time payment. There is no automatic renewal.
We accept:
Balance-Sheet-Based Accruals Ratio
SolarEdge Technologies Inc., balance sheet computation of aggregate accruals
US$ in thousands
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Operating Assets | ||||||
| Total assets | ||||||
| Less: Cash and cash equivalents | ||||||
| Less: Marketable securities | ||||||
| Operating assets | ||||||
| Operating Liabilities | ||||||
| Total liabilities | ||||||
| Less: Short-term finance lease liabilities | ||||||
| Less: Convertible senior notes, net | ||||||
| Less: Long-term finance lease liabilities | ||||||
| Operating liabilities | ||||||
| Net operating assets1 | ||||||
| Balance-sheet-based aggregate accruals2 | ||||||
| Financial Ratio | ||||||
| Balance-sheet-based accruals ratio3 | ||||||
| Benchmarks | ||||||
| Balance-Sheet-Based Accruals Ratio, Competitors4 | ||||||
| Advanced Micro Devices Inc. | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| Texas Instruments Inc. | ||||||
| Balance-Sheet-Based Accruals Ratio, Sector | ||||||
| Semiconductors & Semiconductor Equipment | ||||||
| Balance-Sheet-Based Accruals Ratio, Industry | ||||||
| Information Technology | ||||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Net operating assets = Operating assets – Operating liabilities
= – =
2 2022 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2022 – Net operating assets2021
= – =
3 2022 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.
- Net Operating Assets
- There is a clear upward trend in net operating assets over the analyzed period. Beginning at approximately $499 million in 2019, the figure rises steadily each year, reaching about $1.83 billion by the end of 2022. This represents a significant growth, showing a nearly fourfold increase in net operating assets within four years, indicating expansion in operational resource deployment or accumulation of operational assets.
- Balance-Sheet-Based Aggregate Accruals
- The balance-sheet-based aggregate accruals display fluctuations over the period. Starting at approximately $238 million in 2019, the amount slightly decreases to around $218 million in 2020. However, it then sharply increases to about $560 million in 2021, followed by a slight decrease to roughly $549 million in 2022. This pattern reflects a notable rise in accrual-based measures particularly in 2021, suggesting increased recognition of non-cash items or timing differences in accounting recognitions during that year.
- Balance-Sheet-Based Accruals Ratio
- The accruals ratio exhibits varying dynamics, beginning at 62.75% in 2019, which then significantly declines to 35.82% in 2020. It rises again in 2021 to 56.22%, before dropping back to 35.41% in 2022. These fluctuations indicate periods of inconsistent relationship between accruals and net operating assets. The lower ratios in 2020 and 2022 suggest that accruals constituted a smaller proportion of net operating assets in those years, while the peak in 2019 and 2021 points to higher accrual intensity relative to the size of net operating assets.
Cash-Flow-Statement-Based Accruals Ratio
SolarEdge Technologies Inc., cash flow statement computation of aggregate accruals
US$ in thousands
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Net income attributable to SolarEdge Technologies, Inc. | ||||||
| Less: Net cash provided by operating activities | ||||||
| Less: Net cash used in investing activities | ||||||
| Cash-flow-statement-based aggregate accruals | ||||||
| Financial Ratio | ||||||
| Cash-flow-statement-based accruals ratio1 | ||||||
| Benchmarks | ||||||
| Cash-Flow-Statement-Based Accruals Ratio, Competitors2 | ||||||
| Advanced Micro Devices Inc. | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| Texas Instruments Inc. | ||||||
| Cash-Flow-Statement-Based Accruals Ratio, Sector | ||||||
| Semiconductors & Semiconductor Equipment | ||||||
| Cash-Flow-Statement-Based Accruals Ratio, Industry | ||||||
| Information Technology | ||||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 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
- The net operating assets demonstrated a consistent and significant increase from 2019 through 2022. Beginning at approximately 498.6 million US dollars at the end of 2019, this figure rose to 716.1 million by the end of 2020. The growth accelerated markedly thereafter, with net operating assets more than doubling in 2021 to approximately 1.28 billion, and continuing to increase by a substantial amount to about 1.83 billion by the end of 2022. This upward trend suggests a steady expansion in the company's operating base and investment in asset capacity over the four-year period.
- Cash-flow-statement-based Aggregate Accruals
- Aggregate accruals based on the cash flow statement showed a pronounced upward trajectory over the years analyzed. Starting from around 40.4 million US dollars at the end of 2019, this figure increased nearly fourfold to approximately 154.3 million in 2020. The accruals then surged significantly in 2021 to approximately 439.3 million and continued to rise further, reaching roughly 479.5 million by the end of 2022. This substantial increase in accruals indicates that a growing portion of the company's financial performance may be related to non-cash items or timing differences in cash flows.
- Cash-flow-statement-based Accruals Ratio
- The accruals ratio exhibited notable variability with a general rising trend between 2019 and 2021, followed by a decline in 2022. This ratio increased sharply from 10.65% in 2019 to 25.41% in 2020, and further peaked at 44.1% in 2021, indicating a growing proportion of accruals relative to net operating assets over this period. However, in 2022, the accruals ratio decreased to 30.92%, signaling a partial reversal in the previous upward trend. The fluctuations in this ratio reflect changes in the company’s earnings quality, with a particularly high accrual component in 2021 that somewhat moderated in the subsequent year.