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.
Balance-Sheet-Based Accruals Ratio
Accenture PLC, balance sheet computation of aggregate accruals
US$ in thousands
| Aug 31, 2026 | Aug 31, 2025 | Aug 31, 2024 | Aug 31, 2023 | Aug 31, 2022 | Aug 31, 2021 | ||
|---|---|---|---|---|---|---|---|
| Operating Assets | |||||||
| Total assets | 73,597,792) | 65,394,897) | 55,932,363) | 51,245,305) | 47,263,390) | 43,175,843) | |
| Less: Cash and cash equivalents | 12,831,471) | 11,478,729) | 5,004,469) | 9,045,032) | 7,889,833) | 8,168,174) | |
| Less: Short-term investments | 6,298) | 5,945) | 5,396) | 4,575) | 3,973) | 4,294) | |
| Operating assets | 60,760,023) | 53,910,223) | 50,922,498) | 42,195,698) | 39,369,584) | 35,003,375) | |
| Operating Liabilities | |||||||
| Total liabilities | 40,340,676) | 33,153,930) | 26,764,115) | 24,786,712) | 24,516,302) | 23,078,729) | |
| Less: Current portion of long-term debt and bank borrowings | 113,069) | 114,484) | 946,229) | 104,810) | 9,175) | 12,080) | |
| Less: Long-term debt, excluding current portion | 9,998,689) | 5,034,169) | 78,628) | 43,093) | 45,893) | 53,473) | |
| Operating liabilities | 30,228,918) | 28,005,277) | 25,739,258) | 24,638,809) | 24,461,234) | 23,013,176) | |
| Net operating assets1 | 30,531,105) | 25,904,946) | 25,183,240) | 17,556,889) | 14,908,350) | 11,990,199) | |
| Balance-sheet-based aggregate accruals2 | 4,626,159) | 721,706) | 7,626,351) | 2,648,539) | 2,918,151) | —) | |
| Financial Ratio | |||||||
| Balance-sheet-based accruals ratio3 | 16.39% | 2.83% | 35.69% | 16.32% | 21.70% | — | |
| Benchmarks | |||||||
| Balance-Sheet-Based Accruals Ratio, Competitors4 | |||||||
| Adobe Inc. | — | -5.28% | -3.83% | 1.85% | -8.24% | 14.14% | |
| AppLovin Corp. | — | -20.02% | -0.63% | -1.52% | 36.28% | — | |
| Cadence Design Systems Inc. | — | 9.47% | 39.84% | 11.17% | 26.65% | — | |
| Datadog Inc. | — | 53.88% | -28.51% | -35.73% | 17.56% | — | |
| International Business Machines Corp. | — | 16.28% | 2.79% | 2.42% | 1.55% | — | |
| Intuit Inc. | -8.23% | 3.52% | 3.35% | -1.74% | 85.68% | — | |
| Microsoft Corp. | 33.11% | 21.81% | 52.18% | 22.96% | 42.27% | — | |
| Oracle Corp. | 34.01% | 20.79% | 4.30% | 51.77% | 9.90% | — | |
| Palantir Technologies Inc. | — | 509.21% | — | — | — | — | |
| Palo Alto Networks Inc. | 136.74% | 32.24% | 89.91% | 137.01% | -124.73% | — | |
| Salesforce Inc. | 13.74% | 0.71% | -2.46% | -2.30% | 57.74% | — | |
| ServiceNow Inc. | — | 41.98% | 22.91% | 61.79% | 12.89% | — | |
| Synopsys Inc. | — | 154.48% | 7.85% | 13.85% | 5.01% | 0.36% | |
| Workday Inc. | 28.83% | 20.74% | 28.44% | -11.24% | 55.93% | — | |
| Balance-Sheet-Based Accruals Ratio, Sector | |||||||
| Software & Services | 0.00% | 21.91% | 26.12% | 18.31% | 29.53% | — | |
| Balance-Sheet-Based Accruals Ratio, Industry | |||||||
| Information Technology | 0.00% | 14.20% | 20.88% | 8.81% | 19.09% | — | |
Based on: 10-K (reporting date: 2026-08-31), 10-K (reporting date: 2025-08-31), 10-K (reporting date: 2024-08-31), 10-K (reporting date: 2023-08-31), 10-K (reporting date: 2022-08-31), 10-K (reporting date: 2021-08-31).
1 2026 Calculation
Net operating assets = Operating assets – Operating liabilities
= 60,760,023 – 30,228,918 = 30,531,105
2 2026 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2026 – Net operating assets2025
= 30,531,105 – 25,904,946 = 4,626,159
3 2026 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × 4,626,159 ÷ [(30,531,105 + 25,904,946) ÷ 2] = 16.39%
4 Click competitor name to see calculations.
An analysis of the financial reporting quality reveals a divergence between the steady growth of the asset base and the significant volatility of accrual levels over the observed five-year period.
- Net Operating Assets Expansion
- A consistent upward trajectory is observed in net operating assets, which increased from US$ 14.9 billion in August 2022 to US$ 30.5 billion by August 2026. A notable acceleration in growth occurred between 2023 and 2024, where assets expanded from US$ 17.6 billion to US$ 25.2 billion, indicating a substantial increase in the company's operational scale.
- Aggregate Accruals Volatility
- Balance-sheet-based aggregate accruals exhibited irregular fluctuations. After remaining relatively stable between 2022 and 2023, accruals spiked to a peak of US$ 7.6 billion in 2024. This was followed by a precipitous decline to US$ 721.7 million in 2025, before rebounding to US$ 4.6 billion in 2026.
- Accruals Ratio Interpretation
- The accruals ratio demonstrated extreme variance, reflecting shifts in earnings quality. The ratio peaked at 35.69% in 2024, suggesting that a higher proportion of reported earnings was derived from non-cash accruals relative to the operating asset base. In contrast, the ratio dropped to a period low of 2.83% in 2025, indicating a phase where earnings were more closely aligned with actual cash flows. By 2026, the ratio returned to 16.39%, a level comparable to the 2023 figure, suggesting a normalization of the relationship between accruals and net operating assets.
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Cash-Flow-Statement-Based Accruals Ratio
Accenture PLC, cash flow statement computation of aggregate accruals
US$ in thousands
| Aug 31, 2026 | Aug 31, 2025 | Aug 31, 2024 | Aug 31, 2023 | Aug 31, 2022 | Aug 31, 2021 | ||
|---|---|---|---|---|---|---|---|
| Net income attributable to Accenture plc | 8,367,056) | 7,678,433) | 7,264,787) | 6,871,557) | 6,877,169) | 5,906,809) | |
| Less: Net cash provided by operating activities | 12,363,346) | 11,474,399) | 9,131,027) | 9,524,268) | 9,541,129) | 8,975,148) | |
| Less: Net cash used in investing activities | (5,636,688) | (2,019,650) | (7,061,818) | (2,622,470) | (4,260,629) | (4,309,766) | |
| Cash-flow-statement-based aggregate accruals | 1,640,398) | (1,776,316) | 5,195,578) | (30,241) | 1,596,669) | 1,241,427) | |
| Financial Ratio | |||||||
| Cash-flow-statement-based accruals ratio1 | 5.81% | -6.95% | 24.31% | -0.19% | 11.87% | — | |
| Benchmarks | |||||||
| Cash-Flow-Statement-Based Accruals Ratio, Competitors2 | |||||||
| Adobe Inc. | — | -14.85% | -21.90% | -21.73% | -19.93% | 9.21% | |
| AppLovin Corp. | — | -27.29% | -10.24% | -15.40% | 22.07% | — | |
| Cadence Design Systems Inc. | — | -3.48% | 17.36% | 3.78% | 15.03% | — | |
| Datadog Inc. | — | 206.67% | 30.92% | 53.36% | -34.44% | — | |
| International Business Machines Corp. | — | 10.47% | -3.73% | 0.99% | -7.22% | — | |
| Intuit Inc. | -14.09% | -0.10% | -8.44% | -8.74% | 25.60% | — | |
| Microsoft Corp. | 22.28% | 12.55% | 30.89% | 5.22% | 13.42% | — | |
| Oracle Corp. | 29.14% | 13.98% | -1.01% | 42.79% | -30.58% | — | |
| Palantir Technologies Inc. | — | 2,593.23% | — | — | — | — | |
| Palo Alto Networks Inc. | -7.34% | -8.91% | 33.84% | -37.95% | -196.64% | — | |
| Salesforce Inc. | 1.74% | -6.66% | -8.44% | -8.49% | 21.96% | — | |
| ServiceNow Inc. | — | -29.72% | -7.12% | 15.44% | 8.80% | — | |
| Synopsys Inc. | — | 71.60% | -7.64% | 0.20% | -4.64% | -4.88% | |
| Workday Inc. | -55.17% | -4.25% | 34.56% | 18.64% | -0.65% | — | |
| Cash-Flow-Statement-Based Accruals Ratio, Sector | |||||||
| Software & Services | 0.00% | 10.54% | 12.11% | 7.33% | 2.29% | — | |
| Cash-Flow-Statement-Based Accruals Ratio, Industry | |||||||
| Information Technology | 0.00% | 5.89% | 5.99% | 1.37% | 3.25% | — | |
Based on: 10-K (reporting date: 2026-08-31), 10-K (reporting date: 2025-08-31), 10-K (reporting date: 2024-08-31), 10-K (reporting date: 2023-08-31), 10-K (reporting date: 2022-08-31), 10-K (reporting date: 2021-08-31).
1 2026 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × 1,640,398 ÷ [(30,531,105 + 25,904,946) ÷ 2] = 5.81%
2 Click competitor name to see calculations.
The financial period from August 2022 to August 2026 is characterized by a consistent expansion of the operating asset base contrasted with significant volatility in aggregate accruals and the corresponding accruals ratio.
- Net Operating Assets Growth
- A sustained upward trajectory is observed in net operating assets, which increased from $14.91 billion in 2022 to $30.53 billion by 2026. This represents a growth of approximately 104% over the analyzed period, indicating a substantial increase in the scale of the company's operating resources.
- Aggregate Accruals Volatility
- Cash-flow-statement-based aggregate accruals exhibit extreme fluctuations. After starting at $1.60 billion in 2022, accruals dropped to near zero in 2023 before surging to a peak of $5.20 billion in 2024. A sharp reversal occurred in 2025, with accruals falling to negative $1.78 billion, followed by a recovery to $1.64 billion in 2026.
- Accruals Ratio Analysis
- The accruals ratio demonstrates a highly unstable pattern, reflecting a divergence between accrual-based earnings and cash-flow-based earnings. The ratio shifted from 11.87% in 2022 to a negligible -0.19% in 2023, suggesting high cash conversion during that period. A significant spike to 24.31% in 2024 indicates a period where accruals dominated earnings, which is typically associated with lower reporting quality or timing differences in revenue and expense recognition. This was followed by a negative ratio of -6.95% in 2025, indicating that cash flow exceeded accrual earnings, before moderating to 5.81% in 2026.
- Financial Reporting Quality Insights
- The oscillation of the accruals ratio between 2023 and 2025 suggests a cyclical or irregular pattern in how earnings are realized as cash. The stark contrast between the 2024 peak and the 2025 trough indicates a volatile relationship between reported profits and actual cash generation, although the ratio appears to be stabilizing toward a lower positive percentage by 2026.
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