Stock Analysis on Net

Texas Instruments Inc. (NASDAQ:TXN)

$24.99

Financial Reporting Quality: Aggregate Accruals

Microsoft Excel

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


We accept:

Visa Mastercard American Express Maestro Discover JCB PayPal Google Pay
Visa Secure Mastercard Identity Check American Express SafeKey

Balance-Sheet-Based Accruals Ratio

Texas Instruments Inc., balance sheet computation of aggregate accruals

US$ in millions

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Operating Assets
Total assets
Less: Cash and cash equivalents
Less: Short-term investments
Operating assets
Operating Liabilities
Total liabilities
Less: Current portion of long-term debt
Less: Long-term debt, excluding current portion
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.
Balance-Sheet-Based Accruals Ratio, Sector
Semiconductors & Semiconductor Equipment
Balance-Sheet-Based Accruals Ratio, Industry
Information Technology

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 2024 Calculation
Net operating assets = Operating assets – Operating liabilities
= =

2 2024 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2024 – Net operating assets2023
= =

3 2024 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 consistent and significant upward trend in net operating assets over the four-year period. The value increased from $11,335 million at the end of 2021 to $22,919 million by the end of 2024, effectively doubling within the timeframe. This suggests an expansion in the core asset base supporting the company's operations.
Balance-sheet-based aggregate accruals
The aggregate accruals display a notable increase from $1,918 million in 2021 to a peak of $5,300 million in 2023, followed by a decline to $3,374 million in 2024. This pattern indicates a heightened level of accruals in 2023, which then partially reversed the subsequent year.
Balance-sheet-based accruals ratio
The accruals ratio, measured as a percentage of net operating assets, also rises sharply from 18.48% in 2021 to 31.37% in 2023, before dropping to 15.89% in 2024. This pattern implies that while accruals became more prominent relative to operating assets up to 2023, the ratio decreased substantially in 2024, falling below the initial 2021 level.

Cash-Flow-Statement-Based Accruals Ratio

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

US$ in millions

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Net income
Less: Cash flows from operating activities
Less: Cash flows from 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.
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: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 2024 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 exhibited a consistent upward trend over the four-year period. Starting at $11,335 million in 2021, the value increased to $14,245 million in 2022, followed by a sharper rise to $19,545 million in 2023. By 2024, the net operating assets reached $22,919 million, indicating substantial growth in operating asset base year over year.
Cash-flow-statement-based Aggregate Accruals
The aggregate accruals, measured in millions of dollars, also followed an increasing trend from 2021 through 2023. The values rose from $3,108 million in 2021 to $3,612 million in 2022, and further to $4,452 million in 2023. However, in 2024, there was a notable decline to $1,683 million, suggesting a significant reduction in accruals that year after a period of consistent growth.
Cash-flow-statement-based Accruals Ratio
The accruals ratio, expressed as a percentage, corresponded with the movements in aggregate accruals but showed a gradual downward trend throughout the period. The ratio decreased from 29.95% in 2021 to 28.24% in 2022, then to 26.35% in 2023, before sharply dropping to 7.93% in 2024. This pronounced decline in 2024 suggests a marked improvement in the quality of earnings, reflecting fewer accruals relative to operating assets.