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
AT&T Inc. pages available for free this week:
- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Income Statement
- Analysis of Solvency Ratios
- Analysis of Short-term (Operating) Activity Ratios
- Common Stock Valuation Ratios
- Enterprise Value (EV)
- Present Value of Free Cash Flow to Equity (FCFE)
- Net Profit Margin since 2005
- Price to Operating Profit (P/OP) since 2005
- Price to Book Value (P/BV) since 2005
The data is hidden behind: . Unhide it.
Get full access to the entire website from $10.42/mo, or
get 1-month access to AT&T Inc. for $24.99.
This is a one-time payment. There is no automatic renewal.
We accept:
Balance-Sheet-Based Accruals Ratio
AT&T Inc., balance sheet computation of aggregate accruals
US$ in millions
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Operating Assets | ||||||
| Total assets | ||||||
| Less: Cash and cash equivalents | ||||||
| Operating assets | ||||||
| Operating Liabilities | ||||||
| Total liabilities | ||||||
| Less: Debt maturing within one year | ||||||
| Less: Long-term debt, excluding maturing within one year | ||||||
| Operating liabilities | ||||||
| Net operating assets1 | ||||||
| Balance-sheet-based aggregate accruals2 | ||||||
| Financial Ratio | ||||||
| Balance-sheet-based accruals ratio3 | ||||||
| Benchmarks | ||||||
| Balance-Sheet-Based Accruals Ratio, Competitors4 | ||||||
| T-Mobile US Inc. | ||||||
| Verizon Communications Inc. | ||||||
| Balance-Sheet-Based Accruals Ratio, Sector | ||||||
| Telecommunication Services | ||||||
| Balance-Sheet-Based Accruals Ratio, Industry | ||||||
| Communication Services | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 2025 Calculation
Net operating assets = Operating assets – Operating liabilities
= – =
2 2025 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2025 – Net operating assets2024
= – =
3 2025 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.
The balance-sheet-based accruals ratio exhibited significant fluctuations over the observed period. Initially, the ratio was markedly negative, then shifted to positive territory before returning to a modest negative value, and finally becoming positive again. This pattern suggests considerable volatility in the relationship between net operating assets and aggregate accruals.
- Net Operating Assets
- Net operating assets demonstrated a generally increasing trend, rising from 238,646 US$ millions in 2022 to 250,024 US$ millions in 2023. A slight decrease was noted in 2024, falling to 240,459 US$ millions, followed by a modest recovery to 246,358 US$ millions in 2025. The overall change indicates moderate asset growth over the four-year period.
- Balance-Sheet-Based Aggregate Accruals
- Balance-sheet-based aggregate accruals were substantially negative in 2022, registering at -101,394 US$ millions. A dramatic reversal occurred in 2023, with accruals becoming positive at 11,378 US$ millions. Subsequent years saw accruals decline to -9,565 US$ millions in 2024, and then increase again to 5,899 US$ millions in 2025. This indicates a substantial shift in the company’s accrual patterns.
- Balance-Sheet-Based Accruals Ratio
- The balance-sheet-based accruals ratio began at -35.04% in 2022, indicating significant negative accruals relative to net operating assets. In 2023, the ratio improved substantially to 4.66%, suggesting a considerable reduction in negative accruals or an increase in positive accruals. The ratio then decreased to -3.90% in 2024, before rising to 2.42% in 2025. The movement from a large negative value to positive values, and back, warrants further investigation into the underlying drivers of these accruals.
The observed fluctuations in the accruals ratio could be indicative of changes in accounting practices, revenue recognition policies, or underlying economic conditions affecting the business. The initial negative ratio in 2022, followed by a positive shift, suggests a potential correction of prior period accruals or a change in the timing of cash flows relative to reported earnings. The subsequent return to negative accruals in 2024, and the following recovery in 2025, reinforces the need for a deeper understanding of the factors influencing these accrual patterns.
Cash-Flow-Statement-Based Accruals Ratio
AT&T Inc., cash flow statement computation of aggregate accruals
US$ in millions
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Net income (loss) attributable to AT&T | ||||||
| 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 | ||||||
| T-Mobile US Inc. | ||||||
| Verizon Communications Inc. | ||||||
| Cash-Flow-Statement-Based Accruals Ratio, Sector | ||||||
| Telecommunication Services | ||||||
| Cash-Flow-Statement-Based Accruals Ratio, Industry | ||||||
| Communication Services | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 2025 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.
The information presents a review of net operating assets and related accruals over a four-year period. A notable shift in cash-flow-statement-based accruals is observed, moving from negative values to a positive value during the analyzed timeframe.
- Net Operating Assets
- Net operating assets exhibited an increase from 238,646 US$ millions in 2022 to 250,024 US$ millions in 2023. A subsequent decrease to 240,459 US$ millions occurred in 2024, followed by a modest increase to 246,358 US$ millions in 2025. The overall trend suggests relative stability with some fluctuation.
- Cash-Flow-Statement-Based Aggregate Accruals
- Cash-flow-statement-based aggregate accruals were negative for the years 2022, 2023, and 2024, registering at -17,437 US$ millions, -4,254 US$ millions, and -10,333 US$ millions respectively. This indicates that cash flows were generally higher than reported earnings during these periods. A significant change occurred in 2025, with accruals turning positive at 446 US$ millions, suggesting a reversal of this pattern.
- Cash-Flow-Statement-Based Accruals Ratio
- The cash-flow-statement-based accruals ratio mirrored the trend in aggregate accruals. The ratio was -6.03% in 2022, decreasing to -1.74% in 2023. It then decreased further to -4.21% in 2024 before becoming positive at 0.18% in 2025. The movement from negative to positive values suggests a diminishing reliance on non-cash adjustments to achieve reported earnings and a potential improvement in the quality of earnings in the final year of the period.
The substantial shift in the accruals ratio from negative to positive in 2025 warrants further investigation to understand the underlying drivers of this change and assess its sustainability. The initial negative values could indicate conservative accounting practices or operational factors impacting cash generation relative to reported income.