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

Accenture PLC (NYSE:ACN)

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

Accenture PLC, balance sheet computation of aggregate accruals

US$ in thousands

Microsoft Excel LibreOffice Calc
Aug 31, 2020 Aug 31, 2019 Aug 31, 2018 Aug 31, 2017 Aug 31, 2016 Aug 31, 2015
Operating Assets
Total assets 37,078,593  29,789,880  24,449,083  22,689,890  20,609,004  18,266,058 
Less: Cash and cash equivalents 8,415,330  6,126,853  5,061,360  4,126,860  4,905,609  4,360,766 
Less: Short-term investments 94,309  3,313  3,192  3,011  2,875  2,448 
Operating assets 28,568,954  23,659,714  19,384,531  18,560,019  15,700,520  13,902,844 
Operating Liabilities
Total liabilities 19,579,420  14,962,189  13,724,495  12,979,690  12,419,628  11,618,487 
Less: Current portion of long-term debt and bank borrowings 7,820  6,411  5,337  2,907  2,773  1,848 
Less: Long-term debt, excluding current portion 54,052  16,247  19,676  22,163  24,457  25,587 
Operating liabilities 19,517,548  14,939,531  13,699,482  12,954,620  12,392,398  11,591,052 
 
Net operating assets1 9,051,406  8,720,183  5,685,049  5,605,399  3,308,122  2,311,792 
Balance-sheet-based aggregate accruals2 331,223  3,035,134  79,650  2,297,277  996,330  — 
Financial Ratio
Balance-sheet-based accruals ratio3 3.73% 42.14% 1.41% 51.55% 35.46%
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
Automatic Data Processing Inc. 2.72% 53.63% 2.87% -3.05% 3.70%
Waste Management Inc. 19.64% 4.61% 4.60% 6.06%
Balance-Sheet-Based Accruals Ratio, Sector
Support Services 12.51% 21.94% 3.64% 13.67% 200.00%
Balance-Sheet-Based Accruals Ratio, Industry
Industrials 4.26% -6.11% 1.08% 10.08% 200.00%

Based on: 10-K (filing date: 2020-10-22), 10-K (filing date: 2019-10-29), 10-K (filing date: 2018-10-24), 10-K (filing date: 2017-10-26), 10-K (filing date: 2016-10-28), 10-K (filing date: 2015-10-30).

1 2020 Calculation
Net operating assets = Operating assets – Operating liabilities
= 28,568,95419,517,548 = 9,051,406

2 2020 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2020 – Net operating assets2019
= 9,051,4068,720,183 = 331,223

3 2020 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × 331,223 ÷ [(9,051,406 + 8,720,183) ÷ 2] = 3.73%

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, Accenture PLC improved earnings quality from 2019 to 2020.

Cash-Flow-Statement-Based Accruals Ratio

Accenture PLC, cash flow statement computation of aggregate accruals

US$ in thousands

Microsoft Excel LibreOffice Calc
Aug 31, 2020 Aug 31, 2019 Aug 31, 2018 Aug 31, 2017 Aug 31, 2016 Aug 31, 2015
Net income attributable to Accenture plc 5,107,839  4,779,112  4,059,907  3,445,149  4,111,892  3,053,581 
Less: Net cash provided by operating activities 8,215,152  6,626,953  6,026,691  4,973,039  4,575,115  4,092,137 
Less: Net cash used in investing activities (1,894,519) (1,755,576) (1,249,604) (2,233,879) (610,350) (1,170,384)
Cash-flow-statement-based aggregate accruals (1,212,794) (92,265) (717,180) 705,989  147,127  131,828 
Financial Ratio
Cash-flow-statement-based accruals ratio1 -13.65% -1.28% -12.70% 15.84% 5.24%
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
Automatic Data Processing Inc. -64.26% 40.06% 49.61% -188.48% 269.27%
Waste Management Inc. 15.59% 1.03% 3.30% 0.98%
Cash-Flow-Statement-Based Accruals Ratio, Sector
Support Services -5.93% 6.64% 5.72% -23.15% 85.09%
Cash-Flow-Statement-Based Accruals Ratio, Industry
Industrials -2.31% -2.60% -2.05% 0.01% -19.21%

Based on: 10-K (filing date: 2020-10-22), 10-K (filing date: 2019-10-29), 10-K (filing date: 2018-10-24), 10-K (filing date: 2017-10-26), 10-K (filing date: 2016-10-28), 10-K (filing date: 2015-10-30).

1 2020 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × -1,212,794 ÷ [(9,051,406 + 8,720,183) ÷ 2] = -13.65%

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, Accenture PLC deteriorated earnings quality from 2019 to 2020.