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

Danaher Corp. (NYSE:DHR)

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

Danaher Corp., balance sheet computation of aggregate accruals

US$ in thousands

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Operating Assets
Total assets 62,081,600  47,832,500  46,648,600  45,295,300  48,222,200 
Less: Cash and equivalents 19,912,300  787,800  630,300  963,700  790,800 
Operating assets 42,169,300  47,044,700  46,018,300  44,331,600  47,431,400 
Operating Liabilities
Total liabilities 31,799,700  19,605,800  20,280,800  22,218,500  24,458,200 
Less: Notes payable and current portion of long-term debt 212,400  51,800  194,700  2,594,800  845,200 
Less: Long-term debt, excluding current portion 21,516,700  9,688,500  10,327,400  9,674,200  12,025,200 
Operating liabilities 10,070,600  9,865,500  9,758,700  9,949,500  11,587,800 
 
Net operating assets1 32,098,700  37,179,200  36,259,600  34,382,100  35,843,600 
Balance-sheet-based aggregate accruals2 (5,080,500) 919,600  1,877,500  (1,461,500)
Financial Ratio
Balance-sheet-based accruals ratio3 -14.67% 2.50% 5.32% -4.16%
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
Becton, Dickinson & Co. -3.42% 80.26% 0.01% -5.12% 98.81%
Boston Scientific Corp. 40.87% 22.77% 3.43% 2.89%
Intuitive Surgical Inc. 33.12% 26.86% -15.26% 15.49%
Medtronic PLC 0.51% -7.08% -0.74% 1.04%
Stryker Corp. 8.47% 21.55% 9.67% 42.96%
Thermo Fisher Scientific Inc. 1.24% -1.37% 18.69% 11.17%
UnitedHealth Group Inc. 12.14% 13.95% 13.02% 9.15%
Balance-Sheet-Based Accruals Ratio, Sector
Health Care Equipment & Services 5.01% 12.93% 7.26% 5.37%
Balance-Sheet-Based Accruals Ratio, Industry
Health Care 12.75% -2.07% 8.07% 0.80%

Based on: 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-21), 10-K (filing date: 2017-02-22), 10-K (filing date: 2016-02-24).

1 2019 Calculation
Net operating assets = Operating assets – Operating liabilities
= 42,169,30010,070,600 = 32,098,700

2 2019 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2019 – Net operating assets2018
= 32,098,70037,179,200 = -5,080,500

3 2019 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × -5,080,500 ÷ [(32,098,700 + 37,179,200) ÷ 2] = -14.67%

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, Danaher Corp. deteriorated earnings quality from 2018 to 2019.

Cash-Flow-Statement-Based Accruals Ratio

Danaher Corp., cash flow statement computation of aggregate accruals

US$ in thousands

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Net earnings 3,008,200  2,650,900  2,492,100  2,553,700  3,357,400 
Less: Net cash provided by operating activities 3,657,400  4,022,000  3,477,800  3,087,500  3,828,000 
Less: Net cash used in investing activities (1,166,100) (2,949,400) (843,400) (5,173,200) (14,912,200)
Cash-flow-statement-based aggregate accruals 516,900  1,578,300  (142,300) 4,639,400  14,441,600 
Financial Ratio
Cash-flow-statement-based accruals ratio1 1.49% 4.30% -0.40% 13.21%
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
Becton, Dickinson & Co. -3.34% 45.11% -3.22% -5.06% 58.68%
Boston Scientific Corp. 40.22% 23.38% -2.55% 2.21%
Intuitive Surgical Inc. 21.54% 31.54% -28.80% 32.51%
Medtronic PLC -2.45% -10.98% -1.82% -5.58%
Stryker Corp. 7.21% 23.53% 7.81% 37.39%
Thermo Fisher Scientific Inc. 0.47% -0.79% 14.43% 12.42%
UnitedHealth Group Inc. 9.67% 11.81% 8.68% 11.49%
Cash-Flow-Statement-Based Accruals Ratio, Sector
Health Care Equipment & Services 5.14% 8.34% 3.66% 6.63%
Cash-Flow-Statement-Based Accruals Ratio, Industry
Health Care 2.26% -7.01% -0.36% 3.57%

Based on: 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-21), 10-K (filing date: 2017-02-22), 10-K (filing date: 2016-02-24).

1 2019 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × 516,900 ÷ [(32,098,700 + 37,179,200) ÷ 2] = 1.49%

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, Danaher Corp. improved earnings quality from 2018 to 2019.