Stock Analysis on Net
Stock Analysis on Net

Accenture PLC (NYSE:ACN)

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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.

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Balance-Sheet-Based Accruals Ratio

Accenture PLC, balance sheet computation of aggregate accruals

US$ in thousands

Microsoft Excel
Aug 31, 2025 Aug 31, 2024 Aug 31, 2023 Aug 31, 2022 Aug 31, 2021 Aug 31, 2020
Operating Assets
Total assets
Less: Cash and cash equivalents
Less: Short-term investments
Operating assets
Operating Liabilities
Total liabilities
Less: Current portion of long-term debt and bank borrowings
Less: Long-term debt, excluding current portion
Operating liabilities
 
Net operating assets1
Balance-sheet-based aggregate accruals2
Financial Ratio
Balance-sheet-based accruals ratio3
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
Adobe Inc.
AppLovin Corp.
Cadence Design Systems Inc.
CrowdStrike Holdings Inc.
Datadog Inc.
International Business Machines Corp.
Intuit Inc.
Microsoft Corp.
Oracle Corp.
Palantir Technologies Inc.
Palo Alto Networks Inc.
Salesforce Inc.
ServiceNow Inc.
Synopsys Inc.
Workday Inc.
Balance-Sheet-Based Accruals Ratio, Sector
Software & Services
Balance-Sheet-Based Accruals Ratio, Industry
Information Technology

Based on: 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), 10-K (reporting date: 2020-08-31).

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.

Net Operating Assets
The net operating assets exhibit a consistent upward trend over the five-year period. Starting at approximately 11.99 billion US dollars in 2021, the value increased each year, reaching about 25.90 billion US dollars by 2025. This represents more than a doubling of net operating assets, indicating significant growth in the company’s asset base tied to its operations.
Balance-Sheet-Based Aggregate Accruals
Aggregate accruals values initially remained relatively stable from 2021 to 2023, with values around 2.9 billion and 2.6 billion US dollars. However, there was a notable spike in 2024, where accruals surged to approximately 7.63 billion US dollars, before sharply dropping to about 0.72 billion in 2025. This volatility suggests a significant one-off or unusual accounting adjustment occurred in 2024, followed by normalization in the subsequent year.
Balance-Sheet-Based Accruals Ratio
The accruals ratio displays a declining trend from 2021 to 2023, starting at 27.93% and falling to 16.32%. This decline generally indicates improving earnings quality relative to operating assets during these years. However, in 2024, the ratio dramatically increases to 35.69%, reflecting the marked rise in aggregate accruals relative to net operating assets observed in the same year. By 2025, the ratio plunges to 2.83%, representing a substantial reduction in accruals relative to operating assets, implying sharply improved quality or a reversion to lower accrual levels.
Overall Insights
The trends point to steady growth in operating asset size concurrent with fluctuating accrual behavior. The large increase and subsequent decrease in both aggregate accruals and accrual ratio in 2024 and 2025 suggest an irregularity or exceptional event affecting earnings quality during this period. The sharp fall in the accrual ratio in 2025 indicates a potential return to more conservative or stable accounting practices and possibly better earnings quality in the most recent year under review.

Cash-Flow-Statement-Based Accruals Ratio

Accenture PLC, cash flow statement computation of aggregate accruals

US$ in thousands

Microsoft Excel
Aug 31, 2025 Aug 31, 2024 Aug 31, 2023 Aug 31, 2022 Aug 31, 2021 Aug 31, 2020
Net income attributable to Accenture plc
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
Adobe Inc.
AppLovin Corp.
Cadence Design Systems Inc.
CrowdStrike Holdings Inc.
Datadog Inc.
International Business Machines Corp.
Intuit Inc.
Microsoft Corp.
Oracle Corp.
Palantir Technologies Inc.
Palo Alto Networks Inc.
Salesforce Inc.
ServiceNow Inc.
Synopsys Inc.
Workday Inc.
Cash-Flow-Statement-Based Accruals Ratio, Sector
Software & Services
Cash-Flow-Statement-Based Accruals Ratio, Industry
Information Technology

Based on: 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), 10-K (reporting date: 2020-08-31).

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.

Net Operating Assets
The net operating assets have shown a consistent upward trend over the reported periods. Starting at approximately 11.99 billion USD in 2021, the figure increased steadily each year, reaching around 25.90 billion USD by 2025. This represents a substantial growth in operational asset base, with the most significant annual increase occurring between 2023 and 2024.
Cash-flow-statement-based Aggregate Accruals
Aggregate accruals exhibit volatility throughout the periods. Initially, there was an increase from about 1.24 million USD in 2021 to nearly 1.60 million USD in 2022. This was followed by a sharp decline to a negative value in 2023, which indicates a reversal or reduction in accruals. In 2024, accruals surged substantially to over 5.19 million USD before falling to a negative amount again in 2025. This pattern suggests irregular accrual activity, with significant fluctuations indicating variability in earnings quality or timing differences between cash flows and reported earnings.
Cash-flow-statement-based Accruals Ratio
The accruals ratio mirrors the movements seen in aggregate accruals and reflects notable instability. The ratio remained positive and relatively stable around 11.8% in 2021 and 2022. It turned marginally negative in 2023, reflecting the negative accruals observed that year. In 2024, there was a marked increase to 24.31%, the highest ratio across the timeframe, indicating elevated accruals relative to operating assets. Finally, the ratio dropped again to a negative 6.95% in 2025. These fluctuations suggest a varying degree of alignment between cash flows and accrual earnings, which may affect the quality and reliability of reported profits.