Stock Analysis on Net

Elevance Health Inc. (NYSE:ELV)

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

Elevance Health 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 108,928 102,772 97,460 86,615 77,453
Less: Cash and cash equivalents 6,526 7,387 4,880 5,741 4,937
Less: Fixed maturity securities 29,614 25,952 26,267 23,433 19,676
Less: Equity securities 229 953 1,881 1,559 1,009
Operating assets 72,559 68,480 64,432 55,882 51,831
Operating Liabilities
Total liabilities 69,523 66,378 61,332 53,416 45,725
Less: Short-term borrowings 225 265 275 700
Less: Current portion of long-term debt 1,649 1,500 1,599 700 1,598
Less: Long-term debt, less current portion 23,246 22,349 21,157 19,335 17,787
Operating liabilities 44,403 42,264 38,301 33,381 25,640
 
Net operating assets1 28,156 26,216 26,131 22,501 26,191
Balance-sheet-based aggregate accruals2 1,940 85 3,630 (3,690)
Financial Ratio
Balance-sheet-based accruals ratio3 7.14% 0.32% 14.93% -15.16%
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
Abbott Laboratories 6.06% -0.73% -1.76% -1.55%
Cigna Group -0.99% -7.83% 4.17% -7.30%
CVS Health Corp. 16.15% -9.86% -3.68% -0.89%
Danaher Corp. 3.48% -1.55% 16.41% 52.50%
Humana Inc. -11.37% -44.43% 111.97% 18.14%
Intuitive Surgical Inc. 15.55% -10.21% 50.02% -8.55%
Medtronic PLC 2.69% -1.37% 3.72% -1.48% 0.51%
UnitedHealth Group Inc. 13.41% 17.32% 4.32% 5.27%
Balance-Sheet-Based Accruals Ratio, Sector
Health Care Equipment & Services 8.27% -1.25% 5.99% 3.33%
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
= 72,55944,403 = 28,156

2 2023 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2023 – Net operating assets2022
= 28,15626,216 = 1,940

3 2023 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × 1,940 ÷ [(28,156 + 26,216) ÷ 2] = 7.14%

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, Elevance Health Inc. deteriorated earnings quality from 2022 to 2023.

Cash-Flow-Statement-Based Accruals Ratio

Elevance Health 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
Shareholders’ net income 5,987 6,025 6,104 4,572 4,807
Less: Net cash provided by operating activities 8,061 8,399 8,364 10,688 6,061
Less: Net cash used in investing activities (5,572) (4,560) (9,638) (7,324) (2,792)
Cash-flow-statement-based aggregate accruals 3,498 2,186 7,378 1,208 1,538
Financial Ratio
Cash-flow-statement-based accruals ratio1 12.87% 8.35% 30.34% 4.96%
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
Abbott Laboratories 3.55% -2.08% -3.29% -2.65%
Cigna Group -2.14% -7.06% 2.43% -6.53%
CVS Health Corp. 13.47% -6.15% -4.20% -2.54%
Danaher Corp. 8.20% 1.44% 18.48% 42.90%
Humana Inc. 26.92% -7.68% 91.38% 24.85%
Intuitive Surgical Inc. 4.54% -20.88% 33.51% 10.64%
Medtronic PLC 1.80% -0.97% 0.35% 1.16% -2.45%
UnitedHealth Group Inc. 7.40% 21.73% 5.77% 6.56%
Cash-Flow-Statement-Based Accruals Ratio, Sector
Health Care Equipment & Services 7.08% 1.89% 5.76% 3.91%
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 × 3,498 ÷ [(28,156 + 26,216) ÷ 2] = 12.87%

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, Elevance Health Inc. deteriorated earnings quality from 2022 to 2023.