Stock Analysis on Net

Air Products & Chemicals Inc. (NYSE:APD)

This company has been moved to the archive! The financial data has not been updated since August 9, 2021.

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

Air Products & Chemicals Inc., balance sheet computation of aggregate accruals

US$ in thousands

Microsoft Excel
Sep 30, 2020 Sep 30, 2019 Sep 30, 2018 Sep 30, 2017 Sep 30, 2016 Sep 30, 2015
Operating Assets
Total assets 25,168,500 18,942,800 19,178,300 18,467,200 18,055,300 17,438,100
Less: Cash and cash items 5,253,000 2,248,700 2,791,300 3,273,600 1,501,300 206,400
Less: Short-term investments 1,104,900 166,000 184,700 404,000
Operating assets 18,810,600 16,528,100 16,202,300 14,789,600 16,554,000 17,231,700
Operating Liabilities
Total liabilities 12,725,400 7,554,500 8,002,000 8,281,700 10,841,900 10,057,000
Less: Short-term borrowings 7,700 58,200 54,300 144,000 935,800 1,494,300
Less: Current portion of long-term debt 470,000 40,400 406,600 416,400 371,300 435,600
Less: Long-term debt, excluding current portion 7,132,900 2,907,300 2,967,400 3,402,400 4,918,100 3,949,100
Less: Long-term debt, related party 297,200 320,100 384,300
Operating liabilities 4,817,600 4,228,500 4,189,400 4,318,900 4,616,700 4,178,000
 
Net operating assets1 13,993,000 12,299,600 12,012,900 10,470,700 11,937,300 13,053,700
Balance-sheet-based aggregate accruals2 1,693,400 286,700 1,542,200 (1,466,600) (1,116,400)
Financial Ratio
Balance-sheet-based accruals ratio3 12.88% 2.36% 13.72% -13.09% -8.93%
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
Linde plc -1.19%
Balance-Sheet-Based Accruals Ratio, Industry
Materials -2.91% 200.00%

Based on: 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30).

1 2020 Calculation
Net operating assets = Operating assets – Operating liabilities
= 18,810,6004,817,600 = 13,993,000

2 2020 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2020 – Net operating assets2019
= 13,993,00012,299,600 = 1,693,400

3 2020 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × 1,693,400 ÷ [(13,993,000 + 12,299,600) ÷ 2] = 12.88%

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, Air Products & Chemicals Inc. deteriorated earnings quality from 2019 to 2020.

Cash-Flow-Statement-Based Accruals Ratio

Air Products & Chemicals Inc., cash flow statement computation of aggregate accruals

US$ in thousands

Microsoft Excel
Sep 30, 2020 Sep 30, 2019 Sep 30, 2018 Sep 30, 2017 Sep 30, 2016 Sep 30, 2015
Net income attributable to Air Products 1,886,700 1,760,000 1,497,800 3,000,400 631,100 1,277,900
Less: Cash provided by operating activities 3,264,700 2,969,900 2,554,700 2,534,100 2,707,400 2,437,800
Less: Cash used for investing activities (3,560,000) (2,113,400) (1,649,100) (1,417,700) (972,000) (1,599,700)
Cash-flow-statement-based aggregate accruals 2,182,000 903,500 592,200 1,884,000 (1,104,300) 439,800
Financial Ratio
Cash-flow-statement-based accruals ratio1 16.60% 7.43% 5.27% 16.82% -8.84%
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
Linde plc -3.11%
Cash-Flow-Statement-Based Accruals Ratio, Industry
Materials -4.70% -6.07%

Based on: 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30).

1 2020 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × 2,182,000 ÷ [(13,993,000 + 12,299,600) ÷ 2] = 16.60%

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, Air Products & Chemicals Inc. deteriorated earnings quality from 2019 to 2020.