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

AbbVie Inc. (NYSE:ABBV)

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

AbbVie Inc., balance sheet computation of aggregate accruals

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Operating Assets
Total assets 150,565  89,115  59,352  70,786  66,099 
Less: Cash and equivalents 8,449  39,924  7,289  9,303  5,100 
Less: Short-term investments 30  —  772  486  1,323 
Operating assets 142,086  49,191  51,291  60,997  59,676 
Operating Liabilities
Total liabilities 137,468  97,287  67,798  65,689  61,463 
Less: Short-term borrowings 34  —  3,699  400  377 
Less: Current portion of long-term debt and finance lease obligations 8,468  3,753  1,609  6,015  25 
Less: Long-term debt and finance lease obligations, excluding current portion 77,554  62,975  35,002  30,953  36,440 
Operating liabilities 51,412  30,559  27,488  28,321  24,621 
 
Net operating assets1 90,674  18,632  23,803  32,676  35,055 
Balance-sheet-based aggregate accruals2 72,042  (5,171) (8,873) (2,379) — 
Financial Ratio
Balance-sheet-based accruals ratio3 131.82% -24.37% -31.42% -7.02%
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
Amgen Inc. 3.47% 56.66% -9.88% -33.04%
Eli Lilly & Co. 18.42% -0.10% -10.27% -5.99%
Gilead Sciences Inc. 59.36% 19.80% -41.29% -16.94%
Illumina Inc. 2.78% -2.16% 10.15% 6.34%
Johnson & Johnson 7.76% -3.85% -8.03% 31.51%
Merck & Co. Inc. 15.90% -2.90% -15.70% -0.65%
Pfizer Inc. -14.91% 19.85% -9.34% 12.36%
Regeneron Pharmaceuticals Inc. 16.50% 25.36% 20.14% 33.15%
Thermo Fisher Scientific Inc. 1.96% 1.24% -1.37% 18.69%
Zoetis Inc. 2.02% 4.03% 29.08% -1.25%
Balance-Sheet-Based Accruals Ratio, Sector
Pharmaceuticals, Biotechnology & Life Sciences 23.22% 8.65% -11.56% 6.76%
Balance-Sheet-Based Accruals Ratio, Industry
Health Care 11.99% 13.65% 7.32% 8.59%

Based on: 10-K (filing date: 2021-02-19), 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-27), 10-K (filing date: 2018-02-16), 10-K (filing date: 2017-02-17).

1 2020 Calculation
Net operating assets = Operating assets – Operating liabilities
= 142,08651,412 = 90,674

2 2020 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2020 – Net operating assets2019
= 90,67418,632 = 72,042

3 2020 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × 72,042 ÷ [(90,674 + 18,632) ÷ 2] = 131.82%

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, AbbVie Inc. deteriorated earnings quality from 2019 to 2020.

Cash-Flow-Statement-Based Accruals Ratio

AbbVie Inc., cash flow statement computation of aggregate accruals

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Net earnings attributable to AbbVie Inc. 4,616  7,882  5,687  5,309  5,953 
Less: Cash flows from operating activities 17,588  13,324  13,427  9,960  7,041 
Less: Cash flows from investing activities (37,557) 596  (1,006) (274) (6,074)
Cash-flow-statement-based aggregate accruals 24,585  (6,038) (6,734) (4,377) 4,986 
Financial Ratio
Cash-flow-statement-based accruals ratio1 44.98% -28.46% -23.85% -12.92%
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
Amgen Inc. 6.95% -29.37% -95.70% -22.85%
Eli Lilly & Co. 11.38% 74.20% -25.54% -11.43%
Gilead Sciences Inc. 20.18% 19.49% -73.15% 28.23%
Illumina Inc. 5.48% -33.57% 65.79% 3.10%
Johnson & Johnson 17.00% -3.04% -5.08% -7.40%
Merck & Co. Inc. 13.75% -2.28% -19.26% -13.29%
Pfizer Inc. 3.27% 7.93% -10.12% 10.69%
Regeneron Pharmaceuticals Inc. 10.32% 22.48% 28.32% 19.22%
Thermo Fisher Scientific Inc. -0.89% 0.47% -0.79% 14.43%
Zoetis Inc. 1.15% 2.95% 31.33% -4.07%
Cash-Flow-Statement-Based Accruals Ratio, Sector
Pharmaceuticals, Biotechnology & Life Sciences 13.87% 2.41% -17.57% 0.51%
Cash-Flow-Statement-Based Accruals Ratio, Industry
Health Care 7.06% 3.14% -1.02% 1.07%

Based on: 10-K (filing date: 2021-02-19), 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-27), 10-K (filing date: 2018-02-16), 10-K (filing date: 2017-02-17).

1 2020 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × 24,585 ÷ [(90,674 + 18,632) ÷ 2] = 44.98%

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, AbbVie Inc. deteriorated earnings quality from 2019 to 2020.