Stock Analysis on Net

Anthem Inc. (NYSE:ANTM)

Financial Reporting Quality: Aggregate Accruals 

Microsoft Excel LibreOffice Calc

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

Anthem Inc., balance sheet computation of aggregate accruals

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Operating Assets
Total assets 97,460  86,615  77,453  71,571  70,540 
Less: Cash and cash equivalents 4,880  5,741  4,937  3,934  3,609 
Less: Fixed maturity securities 26,267  23,433  19,676  16,692  17,377 
Less: Equity securities 1,881  1,559  1,009  1,493  3,599 
Operating assets 64,432  55,882  51,831  49,452  45,955 
Operating Liabilities
Total liabilities 61,332  53,416  45,725  43,030  44,037 
Less: Short-term borrowings 275  —  700  1,145  1,275 
Less: Current portion of long-term debt 1,599  700  1,598  849  1,275 
Less: Long-term debt, less current portion 21,157  19,335  17,787  17,217  17,382 
Operating liabilities 38,301  33,381  25,640  23,819  24,105 
 
Net operating assets1 26,131  22,501  26,191  25,633  21,849 
Balance-sheet-based aggregate accruals2 3,630  (3,690) 558  3,784  — 
Financial Ratio
Balance-sheet-based accruals ratio3 14.93% -15.16% 2.15% 15.94%
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
Abbott Laboratories -1.76% -1.55% -1.97% -6.71%
Bristol-Myers Squibb Co. -13.40% -13.24% 147.33% -3.17%
CVS Health Corp. -3.68% -0.89% -0.64% 66.39%
Danaher Corp. 16.41% 52.50% -14.67% 2.50%
HCA Healthcare Inc. 7.54% -1.34% 10.12% 7.30%
Intuitive Surgical Inc. 50.02% -8.55% 33.12% 26.86%
Medtronic PLC 3.72% -1.48% 0.51% -7.08% -0.74%
Stryker Corp. 1.18% 21.04% 8.47% 21.55%
UnitedHealth Group Inc. 4.32% 5.27% 12.54% 14.66%
Balance-Sheet-Based Accruals Ratio, Sector
Health Care Equipment & Services 2.11% 2.74% 16.87% 18.83%
Balance-Sheet-Based Accruals Ratio, Industry
Health Care 5.28% 11.58% 13.44% 4.51%

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

1 2021 Calculation
Net operating assets = Operating assets – Operating liabilities
= 64,43238,301 = 26,131

2 2021 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2021 – Net operating assets2020
= 26,13122,501 = 3,630

3 2021 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × 3,630 ÷ [(26,131 + 22,501) ÷ 2] = 14.93%

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, Anthem Inc. improved earnings quality from 2020 to 2021.

Cash-Flow-Statement-Based Accruals Ratio

Anthem Inc., cash flow statement computation of aggregate accruals

US$ in millions

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Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Shareholders’ net income 6,104  4,572  4,807  3,750  3,843 
Less: Net cash provided by operating activities 8,364  10,688  6,061  3,827  4,185 
Less: Net cash used in investing activities (9,638) (7,324) (2,792) (1,259) (5,082)
Cash-flow-statement-based aggregate accruals 7,378  1,208  1,538  1,182  4,740 
Financial Ratio
Cash-flow-statement-based accruals ratio1 30.34% 4.96% 5.94% 4.98%
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
Abbott Laboratories -3.29% -2.65% -1.39% -5.39%
Bristol-Myers Squibb Co. -12.73% -15.67% 10.75% -1.14%
CVS Health Corp. -4.20% -2.54% -2.30% 35.93%
Danaher Corp. 18.48% 42.90% 1.49% 4.30%
HCA Healthcare Inc. 1.92% -6.45% 5.24% 3.27%
Intuitive Surgical Inc. 33.51% 10.64% 21.54% 31.54%
Medtronic PLC 0.35% 1.16% -2.45% -10.98% -1.82%
Stryker Corp. -1.69% 13.89% 7.21% 23.53%
UnitedHealth Group Inc. 5.77% 6.56% 10.03% 12.32%
Cash-Flow-Statement-Based Accruals Ratio, Sector
Health Care Equipment & Services 2.05% 2.15% 2.94% 10.18%
Cash-Flow-Statement-Based Accruals Ratio, Industry
Health Care 6.41% 7.21% 2.81% -3.05%

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

1 2021 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × 7,378 ÷ [(26,131 + 22,501) ÷ 2] = 30.34%

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, Anthem Inc. deteriorated earnings quality from 2020 to 2021.