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: Assets
- Common-Size Income Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Profitability Ratios
- Analysis of Liquidity Ratios
- Common Stock Valuation Ratios
- Capital Asset Pricing Model (CAPM)
- Selected Financial Data since 2005
- Total Asset Turnover since 2005
- Price to Sales (P/S) since 2005
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Balance-Sheet-Based Accruals Ratio
Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | Sep 30, 2016 | ||
---|---|---|---|---|---|---|---|
Operating Assets | |||||||
Total assets | |||||||
Less: Cash and equivalents | |||||||
Less: Restricted cash | |||||||
Less: Short-term investments | |||||||
Operating assets | |||||||
Operating Liabilities | |||||||
Total liabilities | |||||||
Less: Short-term debt | |||||||
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 | |||||||
Abbott Laboratories | |||||||
CVS Health Corp. | |||||||
Elevance Health Inc. | |||||||
Intuitive Surgical Inc. | |||||||
Medtronic PLC | |||||||
UnitedHealth Group Inc. | |||||||
Balance-Sheet-Based Accruals Ratio, Sector | |||||||
Health Care Equipment & Services | |||||||
Balance-Sheet-Based Accruals Ratio, Industry | |||||||
Health Care |
Based on: 10-K (reporting date: 2021-09-30), 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).
1 2021 Calculation
Net operating assets = Operating assets – Operating liabilities
= – =
2 2021 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2021 – Net operating assets2020
= – =
3 2021 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 showed an initial substantial increase from 17,618 million US dollars in 2017 to 41,236 million US dollars in 2018. Following this peak, there was a slight decline observed over the subsequent years, with values decreasing to 39,851 million in 2019, 38,758 million in 2020, and a marginal increase to 38,883 million in 2021. Overall, after the sharp rise in 2018, the net operating assets stabilized with minor fluctuations around 38,800 to 39,800 million US dollars.
- Balance-Sheet-Based Aggregate Accruals
- The balance-sheet-based aggregate accruals presented notable volatility throughout the period. Beginning with a low value of 2 million US dollars in 2017, there was an unusually high spike to 23,618 million in 2018. Subsequently, the accruals reversed to negative territory, recording -1,385 million in 2019 and a similar negative value of -1,093 million in 2020. In 2021, the figure moved back to a positive but modest level of 125 million. This pattern indicates significant variability and potential irregularities or adjustments impacting accrual accounting during these years.
- Balance-Sheet-Based Accruals Ratio
- The accruals ratio reflects the balance-sheet-based aggregate accruals as a percentage of net operating assets, illustrating noteworthy fluctuations. It started at a minimal 0.01% in 2017, surged dramatically to 80.26% in 2018, and then swung sharply into negative values of -3.42% in 2019 and -2.78% in 2020. By 2021, it settled at a low positive percentage of 0.32%. The extreme spike in 2018 and the subsequent negative ratios suggest an atypical earnings quality pattern, with 2018 potentially reflecting significant non-recurring or accounting adjustments, followed by a normalization trend in the later years.
Cash-Flow-Statement-Based Accruals Ratio
Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | Sep 30, 2016 | ||
---|---|---|---|---|---|---|---|
Net income | |||||||
Less: Net cash provided by operating activities | |||||||
Less: Net cash used for investing activities | |||||||
Cash-flow-statement-based aggregate accruals | |||||||
Financial Ratio | |||||||
Cash-flow-statement-based accruals ratio1 | |||||||
Benchmarks | |||||||
Cash-Flow-Statement-Based Accruals Ratio, Competitors2 | |||||||
Abbott Laboratories | |||||||
CVS Health Corp. | |||||||
Elevance Health Inc. | |||||||
Intuitive Surgical Inc. | |||||||
Medtronic PLC | |||||||
UnitedHealth Group Inc. | |||||||
Cash-Flow-Statement-Based Accruals Ratio, Sector | |||||||
Health Care Equipment & Services | |||||||
Cash-Flow-Statement-Based Accruals Ratio, Industry | |||||||
Health Care |
Based on: 10-K (reporting date: 2021-09-30), 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).
1 2021 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.
The financial data reveals several notable trends in the measures of financial reporting quality over the five-year period.
- Net Operating Assets
- Net operating assets showed a significant increase from 17,618 million US dollars in 2017 to 41,236 million US dollars in 2018, representing more than a twofold rise. After this peak in 2018, the figure gradually declined in subsequent years to 39,851 million in 2019, 38,758 million in 2020, and slightly increased to 38,883 million in 2021. Overall, the net operating assets stabilized at a level above twice the initial value from 2017.
- Cash-flow-statement-based Aggregate Accruals
- This measure exhibited considerable volatility during the period. There was a negative value of -567 million US dollars in 2017, followed by a sharp increase to a positive 13,275 million in 2018. This positive peak was not sustained, as the value dropped back to negative territory with -1,356 million in 2019, -1,433 million in 2020, and a less negative figure of -675 million in 2021. The fluctuation suggests a period of one-time or irregular adjustments in 2018, with a reversion to negative accruals afterwards.
- Cash-flow-statement-based Accruals Ratio
- The accruals ratio mirrored the pattern seen in aggregate accruals, with a negative -3.22% in 2017, followed by a substantial spike to 45.11% in 2018. Subsequently, the ratio returned to negative values of -3.34% in 2019 and further decreased slightly to -3.65% in 2020. It somewhat normalized to -1.74% in 2021. The 2018 outlier suggests a significant deviation in accrual quality or cash flow alignment for that year, with a more typical negative ratio in other years.
In summary, while net operating assets showed an overall upward shift with stabilization after 2018, the accrual measures indicate an unusual event or adjustment in 2018, followed by a reversion to negative accrual values more consistent with preceding and succeeding years. This pattern may reflect changes in accounting practices, operational conditions, or financial reporting quality during the analyzed timeframe.