Stock Analysis on Net

Dollar General Corp. (NYSE:DG)

$22.49

This company has been moved to the archive! The financial data has not been updated since August 29, 2024.

Financial Reporting Quality: Aggregate Accruals

Microsoft Excel

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-Based Accruals Ratio

Dollar General Corp., balance sheet computation of aggregate accruals

US$ in thousands

Microsoft Excel
Feb 2, 2024 Feb 3, 2023 Jan 28, 2022 Jan 29, 2021 Jan 31, 2020 Feb 1, 2019
Operating Assets
Total assets
Less: Cash and cash equivalents
Operating assets
Operating Liabilities
Total liabilities
Less: Current portion of long-term obligations
Less: Long-term obligations, 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
Costco Wholesale Corp.
Target Corp.
Walmart Inc.
Balance-Sheet-Based Accruals Ratio, Sector
Consumer Staples Distribution & Retail
Balance-Sheet-Based Accruals Ratio, Industry
Consumer Staples

Based on: 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29), 10-K (reporting date: 2020-01-31), 10-K (reporting date: 2019-02-01).

1 2024 Calculation
Net operating assets = Operating assets – Operating liabilities
= =

2 2024 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2024 – Net operating assets2023
= =

3 2024 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 exhibited a consistent upward trend over the five-year period. Starting from approximately 9.37 billion US dollars in early 2020, the figure increased steadily each year, reaching over 13.2 billion US dollars by early 2024. This growth reflects an expansion in the operating asset base, indicating increased investment or accumulation of operating resources by the company.
Balance-sheet-based Aggregate Accruals
Aggregate accruals showed considerable volatility throughout the period. The value decreased sharply from about 327.6 million US dollars in early 2020 to 41.5 million in early 2021, followed by a substantial increase to 673.6 million in early 2022. The upward trend continued with a peak at approximately 2.08 billion in early 2023 before declining to 1.04 billion in early 2024. These fluctuations suggest varying levels of accruals impacting earnings quality, potentially reflecting changes in estimates or recognition policies.
Balance-sheet-based Accruals Ratio
The accruals ratio mirrored the behavior observed in aggregate accruals, showing significant variation over time. Initially, the ratio was moderate at 3.56% in early 2020, dropping sharply to 0.44% in early 2021, then rising steeply to 6.91% in early 2022. A substantial increase was noted in early 2023 with the ratio peaking at 18.69%, before falling back to 8.21% in early 2024. The peak in early 2023 indicates a period of notably higher accruals relative to net operating assets, which may imply reduced earnings quality or increased estimation uncertainty during that year.

Cash-Flow-Statement-Based Accruals Ratio

Dollar General Corp., cash flow statement computation of aggregate accruals

US$ in thousands

Microsoft Excel
Feb 2, 2024 Feb 3, 2023 Jan 28, 2022 Jan 29, 2021 Jan 31, 2020 Feb 1, 2019
Net income
Less: Net cash provided by operating activities
Less: Net cash used in investing activities
Cash-flow-statement-based aggregate accruals
Financial Ratio
Cash-flow-statement-based accruals ratio1
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
Costco Wholesale Corp.
Target Corp.
Walmart Inc.
Cash-Flow-Statement-Based Accruals Ratio, Sector
Consumer Staples Distribution & Retail
Cash-Flow-Statement-Based Accruals Ratio, Industry
Consumer Staples

Based on: 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29), 10-K (reporting date: 2020-01-31), 10-K (reporting date: 2019-02-01).

1 2024 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 data presents a financial measure related to net operating assets and accruals over a five-year period. Observing the net operating assets, there is a consistent upward trend throughout the years. Starting from approximately $9.37 billion in early 2020, the net operating assets gradually increase each year, reaching over $13.2 billion by early 2024. This demonstrates sustained growth in the operating asset base of the company.

Regarding the cash-flow-statement-based aggregate accruals, the values exhibit more variability. In early 2020, accruals stood positive at around $257 million, then decreased sharply to a negative value of approximately $196 million in early 2021. Subsequently, the accruals rebounded with a significant rise over the next years, peaking at nearly $1.99 billion in early 2023 before declining to about $963 million by early 2024. This pattern indicates fluctuating accrual activity, possibly reflecting changes in operational working capital or accounting adjustments affecting cash flow classification.

The cash-flow-statement-based accruals ratio, which relates the aggregate accruals to the net operating assets, further illustrates these fluctuations on a percentage basis. Initially, the ratio was positive at 2.79% in early 2020, turned negative to -2.09% in early 2021, then showed a considerable increase to 6.14% in early 2022. The ratio peaked at 17.85% in early 2023, indicating a substantial proportion of accruals relative to operating assets, before falling back to 7.59% in early 2024. These movements suggest notable volatility in accrual quality and financial statement adjustments over the analyzed period.

Overall, the net operating assets reinforce a trend of asset growth, while the accrual figures and ratios reflect variability in the timing and recognition of earnings components. The increase in accrual ratios particularly in 2023 signals a potential area for closer scrutiny concerning earnings quality and the sustainability of reported cash flows during that period.