Becton, Dickinson & Co. (NYSE:BDX)

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.

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.