Microsoft Excel LibreOffice Calc

Chevron Corp. (CVX)


Financial Reporting Quality: Aggregate Accruals

High level of difficulty

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

Chevron Corp., balance sheet computation of aggregate accruals

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Operating Assets
Total assets 253,863  253,806  260,078  266,103  266,026 
Less: Cash and cash equivalents 9,342  4,813  6,988  11,022  12,785 
Less: Time deposits 950  —  —  — 
Less: Marketable securities 53  13  310  422 
Operating assets 243,518  248,984  253,077  254,771  252,811 
Operating Liabilities
Total liabilities 98,221  104,487  113,356  112,217  109,835 
Less: Short-term debt 5,726  5,192  10,840  4,928  3,790 
Less: Long-term debt, excluding debt due within one year 28,733  33,571  35,286  33,664  24,028 
Operating liabilities 63,762  65,724  67,230  73,625  82,017 
Net operating assets1 179,756  183,260  185,847  181,146  170,794 
Balance-sheet-based aggregate accruals2 (3,504) (2,587) 4,701  10,352 
Ratio
Balance-sheet-based accruals ratio3 -1.93% -1.40% 2.56% 5.88%
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
ConocoPhillips -2.51% -37.15% -6.18% -10.85%
EOG Resources Inc. 8.99% 11.98% 2.53% -13.11%
Exxon Mobil Corp. -0.16% 9.28% 0.54% 3.00%
Occidental Petroleum Corp. -0.40% -1.23% 2.77% -18.31%
Phillips 66 2.51% 9.96% 4.60% 15.33%
Balance-Sheet-Based Accruals Ratio, Sector
Oil & Gas Producers -0.38% 0.94% 0.89% 1.00%
Balance-Sheet-Based Accruals Ratio, Industry
Oil & Gas -0.91% 0.32% 1.60% 0.70%

Based on: 10-K (filing date: 2019-02-22), 10-K (filing date: 2018-02-22), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-02-25), 10-K (filing date: 2015-02-20).

1 2018 Calculation
Net operating assets = Operating assets – Operating liabilities
= 243,51863,762 = 179,756

2 2018 Calculation
Balance-sheet-based aggregate accruals = Net operating assets 2018 – Net operating assets 2017
= 179,756183,260 = -3,504

3 2018 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × -3,504 ÷ [(179,756 + 183,260) ÷ 2] = -1.93%

4 Click competitor name to see calculations.

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, Chevron Corp. deteriorated earnings quality from 2017 to 2018.

Cash-Flow-Statement-Based Accruals Ratio

Chevron Corp., cash flow statement computation of aggregate accruals

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Net income (loss) attributable to Chevron Corporation 14,824  9,195  (497) 4,587  19,241 
Less: Net cash provided by operating activities 30,618  20,515  12,846  19,456  31,475 
Less: Net cash used for investing activities (12,290) (8,201) (16,852) (23,808) (29,893)
Cash-flow-statement-based aggregate accruals (3,504) (3,119) 3,509  8,939  17,659 
Ratio
Cash-flow-statement-based accruals ratio1 -1.93% -1.69% 1.91% 5.08%
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
ConocoPhillips -7.10% -31.63% -6.85% -5.05%
EOG Resources Inc. 7.96% 11.19% -11.52% -13.85%
Exxon Mobil Corp. 0.54% 2.41% -0.87% 4.62%
Occidental Petroleum Corp. -1.16% -1.63% 5.75% -18.18%
Phillips 66 1.41% 7.94% 5.75% 15.39%
Cash-Flow-Statement-Based Accruals Ratio, Sector
Oil & Gas Producers -0.57% -1.67% -0.24% 2.08%
Cash-Flow-Statement-Based Accruals Ratio, Industry
Oil & Gas -1.36% -2.33% -1.67% 2.34%

Based on: 10-K (filing date: 2019-02-22), 10-K (filing date: 2018-02-22), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-02-25), 10-K (filing date: 2015-02-20).

1 2018 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × -3,504 ÷ [(179,756 + 183,260) ÷ 2] = -1.93%

2 Click competitor name to see calculations.

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, Chevron Corp. deteriorated earnings quality from 2017 to 2018.