Stock Analysis on Net
Stock Analysis on Net
Microsoft Excel LibreOffice Calc

Coca-Cola Co. (NYSE:KO)

Financial Reporting Quality: Aggregate Accruals

Advanced level

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

Coca-Cola Co., balance sheet computation of aggregate accruals

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Operating Assets
Total assets 87,296  86,381  83,216  87,896  87,270 
Less: Cash and cash equivalents 6,795  6,480  8,926  6,006  8,555 
Less: Short-term investments 1,771  1,467  2,025  9,352  9,595 
Less: Marketable securities 2,348  3,228  5,013  5,317  4,051 
Operating assets 76,382  75,206  67,252  67,221  65,069 
Operating Liabilities
Total liabilities 66,012  65,283  64,158  68,919  64,050 
Less: Loans and notes payable 2,183  10,994  13,194  13,205  12,498 
Less: Current maturities of long-term debt 485  4,253  4,997  3,298  3,527 
Less: Long-term debt, excluding current maturities 40,125  27,516  25,364  31,182  29,684 
Operating liabilities 23,219  22,520  20,603  21,234  18,341 
 
Net operating assets1 53,163  52,686  46,649  45,987  46,728 
Balance-sheet-based aggregate accruals2 477  6,037  662  (741) — 
Financial Ratio
Balance-sheet-based accruals ratio3 0.90% 12.15% 1.43% -1.60%
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
PepsiCo Inc. 15.56% 13.65% 15.54% -4.04%
Balance-Sheet-Based Accruals Ratio, Sector
Beverages 7.61% 12.81% 7.33% -2.58%
Balance-Sheet-Based Accruals Ratio, Industry
Consumer Goods 1.82% 1.82% 7.39% 3.37%

Based on: 10-K (filing date: 2021-02-25), 10-K (filing date: 2020-02-24), 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-24).

1 2020 Calculation
Net operating assets = Operating assets – Operating liabilities
= 76,38223,219 = 53,163

2 2020 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2020 – Net operating assets2019
= 53,16352,686 = 477

3 2020 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × 477 ÷ [(53,163 + 52,686) ÷ 2] = 0.90%

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, Coca-Cola Co. improved earnings quality from 2019 to 2020.

Cash-Flow-Statement-Based Accruals Ratio

Coca-Cola Co., cash flow statement computation of aggregate accruals

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Net income attributable to shareowners of The Coca-Cola Company 7,747  8,920  6,434  1,248  6,527 
Less: Net cash provided by operating activities 9,844  10,471  7,320  6,995  8,796 
Less: Net cash (used in) provided by investing activities (1,477) (3,976) 6,348  (2,385) (999)
Cash-flow-statement-based aggregate accruals (620) 2,425  (7,234) (3,362) (1,270)
Financial Ratio
Cash-flow-statement-based accruals ratio1 -1.17% 4.88% -15.62% -7.25%
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
PepsiCo Inc. 18.19% 10.64% -4.39% -2.34%
Cash-Flow-Statement-Based Accruals Ratio, Sector
Beverages 7.69% 7.40% -10.92% -5.27%
Cash-Flow-Statement-Based Accruals Ratio, Industry
Consumer Goods 1.44% -2.07% 2.45% 4.46%

Based on: 10-K (filing date: 2021-02-25), 10-K (filing date: 2020-02-24), 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-24).

1 2020 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × -620 ÷ [(53,163 + 52,686) ÷ 2] = -1.17%

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, Coca-Cola Co. improved earnings quality from 2019 to 2020.