Stock Analysis on Net
Stock Analysis on Net
Microsoft Excel LibreOffice Calc

Texas Instruments Inc. (NASDAQ:TXN)

Financial Reporting Quality: Aggregate Accruals

Advanced level

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

Texas Instruments Inc., balance sheet computation of aggregate accruals

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Operating Assets
Total assets 18,018  17,137  17,642  16,431  16,230 
Less: Cash and cash equivalents 2,437  2,438  1,656  1,154  1,000 
Less: Short-term investments 2,950  1,795  2,813  2,336  2,218 
Operating assets 12,631  12,904  13,173  12,941  13,012 
Operating Liabilities
Total liabilities 9,111  8,143  7,305  5,958  6,284 
Less: Current portion of long-term debt 500  749  500  631  1,000 
Less: Long-term debt, excluding current portion 5,303  4,319  3,577  2,978  3,120 
Operating liabilities 3,308  3,075  3,228  2,349  2,164 
 
Net operating assets1 9,323  9,829  9,945  10,592  10,848 
Balance-sheet-based aggregate accruals2 (506) (116) (647) (256)
Financial Ratio
Balance-sheet-based accruals ratio3 -5.28% -1.17% -6.30% -2.39%
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
Advanced Micro Devices Inc. 28.39% 49.43% 33.24% -57.87%
Analog Devices Inc. 0.29% -2.75% 142.61% -2.62%
Apple Inc. -45.28% -12.22% 16.94% 4.07% 15.49%
Applied Materials Inc. 19.87% 9.56% 7.98% -5.41% 7.76%
Broadcom Inc. 27.77% 29.77% -9.33% 130.30% -4.39%
Cisco Systems Inc. 11.05% -27.67% 10.35% 7.15%
Intel Corp. 4.20% 8.12% 9.37% 23.70%
Lam Research Corp. -6.77% 10.60% 0.89% -0.62%
Micron Technology Inc. 11.13% 20.96% 30.97% 7.49%
NVIDIA Corp. 49.27% 28.14% 61.57% -23.52%
Qualcomm Inc. 48.90% -98.54% -47.48% -0.74% 14.83%
Balance-Sheet-Based Accruals Ratio, Sector
Technology Hardware & Equipment -7.52% -3.20% 12.59% 14.99%
Balance-Sheet-Based Accruals Ratio, Industry
Technology 6.22% 2.01% 12.50% 10.58%

Based on: 10-K (filing date: 2020-02-20), 10-K (filing date: 2019-02-22), 10-K (filing date: 2018-02-22), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-02-24).

1 2019 Calculation
Net operating assets = Operating assets – Operating liabilities
= 12,6313,308 = 9,323

2 2019 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2019 – Net operating assets2018
= 9,3239,829 = -506

3 2019 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × -506 ÷ [(9,323 + 9,829) ÷ 2] = -5.28%

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, Texas Instruments Inc. deteriorated earnings quality from 2018 to 2019.

Cash-Flow-Statement-Based Accruals Ratio

Texas Instruments Inc., cash flow statement computation of aggregate accruals

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Net income 5,017  5,580  3,682  3,595  2,986 
Less: Cash flows from operating activities 6,649  7,189  5,363  4,614  4,268 
Less: Cash flows from investing activities (1,920) (78) (1,127) (650) (302)
Cash-flow-statement-based aggregate accruals 288  (1,531) (554) (369) (980)
Financial Ratio
Cash-flow-statement-based accruals ratio1 3.01% -15.48% -5.40% -3.44%
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
Advanced Micro Devices Inc. -0.19% 43.37% 12.64% -103.39%
Analog Devices Inc. -3.61% -3.78% 62.93% 27.75%
Apple Inc. -47.40% -20.53% 19.28% 17.80% 21.52%
Applied Materials Inc. -1.09% -13.49% 33.14% -4.57% 7.15%
Broadcom Inc. 18.25% 23.21% -13.51% 23.89% -10.19%
Cisco Systems Inc. -80.97% -111.97% 6.18% 20.68%
Intel Corp. 2.52% 3.32% 4.12% 21.28%
Lam Research Corp. 16.67% -78.67% 47.67% -28.43%
Micron Technology Inc. 9.74% 17.59% 20.50% -2.12%
NVIDIA Corp. 143.36% -83.66% 57.83% -15.08%
Qualcomm Inc. -30.37% -127.94% -102.91% 7.18% 14.30%
Cash-Flow-Statement-Based Accruals Ratio, Sector
Technology Hardware & Equipment -16.81% -17.25% 7.05% 15.20%
Cash-Flow-Statement-Based Accruals Ratio, Industry
Technology -8.33% -12.73% 14.50% 15.81%

Based on: 10-K (filing date: 2020-02-20), 10-K (filing date: 2019-02-22), 10-K (filing date: 2018-02-22), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-02-24).

1 2019 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × 288 ÷ [(9,323 + 9,829) ÷ 2] = 3.01%

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, Texas Instruments Inc. improved earnings quality from 2018 to 2019.