Stock Analysis on Net

AbbVie Inc. (NYSE:ABBV)

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.


Balance-Sheet-Based Accruals Ratio

AbbVie Inc., balance sheet computation of aggregate accruals

US$ in millions

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Operating Assets
Total assets 134,711 138,805 146,529 150,565 89,115
Less: Cash and equivalents 12,814 9,201 9,746 8,449 39,924
Less: Short-term investments 2 28 84 30
Operating assets 121,895 129,576 136,699 142,086 49,191
Operating Liabilities
Total liabilities 124,314 121,518 131,093 137,468 97,287
Less: Short-term borrowings 1 14 34
Less: Current portion of long-term debt and finance lease obligations 7,191 4,135 12,481 8,468 3,753
Less: Long-term debt and finance lease obligations, excluding current portion 52,194 59,135 64,189 77,554 62,975
Operating liabilities 64,929 58,247 54,409 51,412 30,559
 
Net operating assets1 56,966 71,329 82,290 90,674 18,632
Balance-sheet-based aggregate accruals2 (14,363) (10,961) (8,384) 72,042
Financial Ratio
Balance-sheet-based accruals ratio3 -22.39% -14.27% -9.69% 131.82%
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
Amgen Inc. 57.08% 4.07% 0.70% 3.47%
Bristol-Myers Squibb Co. -7.12% -3.86% -13.40% -13.24%
Eli Lilly & Co. 28.84% 11.38% 16.60% 18.42%
Gilead Sciences Inc. 1.04% -2.92% -2.34% 59.36%
Johnson & Johnson -21.13% 19.84% 3.75% 7.76%
Merck & Co. Inc. 3.16% 0.46% 25.14% 15.90%
Pfizer Inc. 30.66% 24.95% -7.11% -14.91%
Regeneron Pharmaceuticals Inc. 1.17% 11.07% 43.54% 16.50%
Thermo Fisher Scientific Inc. 4.97% -1.78% 43.38% 1.98%
Vertex Pharmaceuticals Inc. 61.24% 14.07% 18.20% -8.97%
Balance-Sheet-Based Accruals Ratio, Sector
Pharmaceuticals, Biotechnology & Life Sciences 7.77% 5.56% 5.06% 17.61%
Balance-Sheet-Based Accruals Ratio, Industry
Health Care 8.00% 2.36% 5.50% 10.57%

Based on: 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), 10-K (reporting date: 2019-12-31).

1 2023 Calculation
Net operating assets = Operating assets – Operating liabilities
= 121,89564,929 = 56,966

2 2023 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2023 – Net operating assets2022
= 56,96671,329 = -14,363

3 2023 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × -14,363 ÷ [(56,966 + 71,329) ÷ 2] = -22.39%

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 2022 to 2023.

Cash-Flow-Statement-Based Accruals Ratio

AbbVie Inc., cash flow statement computation of aggregate accruals

US$ in millions

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Net earnings attributable to AbbVie Inc. 4,863 11,836 11,542 4,616 7,882
Less: Cash flows from operating activities 22,839 24,943 22,777 17,588 13,324
Less: Cash flows from investing activities (2,009) (623) (2,344) (37,557) 596
Cash-flow-statement-based aggregate accruals (15,967) (12,484) (8,891) 24,585 (6,038)
Financial Ratio
Cash-flow-statement-based accruals ratio1 -24.89% -16.25% -10.28% 44.98%
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
Amgen Inc. 52.47% 8.81% -12.87% 6.95%
Bristol-Myers Squibb Co. -5.99% -9.10% -12.73% -15.67%
Eli Lilly & Co. 28.13% 10.32% 5.30% 11.38%
Gilead Sciences Inc. -0.19% -4.95% -4.86% 20.18%
Johnson & Johnson 13.66% 10.78% 8.23% 17.00%
Merck & Co. Inc. 2.23% 0.61% 29.09% 13.75%
Pfizer Inc. 19.96% 18.46% 13.18% 3.27%
Regeneron Pharmaceuticals Inc. 14.35% 18.61% 49.24% 10.32%
Thermo Fisher Scientific Inc. 3.80% -0.06% 34.69% -0.89%
Vertex Pharmaceuticals Inc. 62.03% -14.45% 1.38% -23.47%
Cash-Flow-Statement-Based Accruals Ratio, Sector
Pharmaceuticals, Biotechnology & Life Sciences 9.84% 2.64% 7.05% 9.16%
Cash-Flow-Statement-Based Accruals Ratio, Industry
Health Care 8.56% 2.29% 6.44% 6.57%

Based on: 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), 10-K (reporting date: 2019-12-31).

1 2023 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × -15,967 ÷ [(56,966 + 71,329) ÷ 2] = -24.89%

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 2022 to 2023.