Stock Analysis on Net

Edwards Lifesciences Corp. (NYSE:EW)

This company has been moved to the archive! The financial data has not been updated since February 14, 2022.

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.


Balance-Sheet-Based Accruals Ratio

Edwards Lifesciences Corp., balance sheet computation of aggregate accruals

US$ in thousands

Microsoft Excel
Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Operating Assets
Total assets 8,502,600 7,237,100 6,488,100 5,323,700 5,695,800
Less: Cash and cash equivalents 862,800 1,183,200 1,179,100 714,100 818,300
Less: Short-term investments 604,000 219,400 337,800 242,400 519,200
Operating assets 7,035,800 5,834,500 4,971,200 4,367,200 4,358,300
Operating Liabilities
Total liabilities 2,666,700 2,662,800 2,339,800 2,183,300 2,739,600
Less: Short-term debt 598,000
Less: Long-term debt 595,700 595,000 594,400 593,800 438,400
Operating liabilities 2,071,000 2,067,800 1,745,400 1,589,500 1,703,200
 
Net operating assets1 4,964,800 3,766,700 3,225,800 2,777,700 2,655,100
Balance-sheet-based aggregate accruals2 1,198,100 540,900 448,100 122,600
Financial Ratio
Balance-sheet-based accruals ratio3 27.44% 15.47% 14.93% 4.51%
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
Abbott Laboratories -1.76% -1.55%
Cigna Group 4.17% -7.30%
CVS Health Corp. -3.68% -0.89%
Danaher Corp. 16.41% 52.50%
Elevance Health Inc. 14.93% -15.16%
Humana Inc. 111.97% 18.14%
Intuitive Surgical Inc. 50.02% -8.55%
Medtronic PLC 3.72% -1.48% 0.51%
UnitedHealth Group Inc. 4.32% 5.27%
Balance-Sheet-Based Accruals Ratio, Sector
Health Care Equipment & Services 5.99% 3.33% 200.00%
Balance-Sheet-Based Accruals Ratio, Industry
Health Care 5.50% 10.57% 200.00%

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

1 2021 Calculation
Net operating assets = Operating assets – Operating liabilities
= 7,035,8002,071,000 = 4,964,800

2 2021 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2021 – Net operating assets2020
= 4,964,8003,766,700 = 1,198,100

3 2021 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × 1,198,100 ÷ [(4,964,800 + 3,766,700) ÷ 2] = 27.44%

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, Edwards Lifesciences Corp. deteriorated earnings quality from 2020 to 2021.

Cash-Flow-Statement-Based Accruals Ratio

Edwards Lifesciences Corp., cash flow statement computation of aggregate accruals

US$ in thousands

Microsoft Excel
Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Net income 1,503,100 823,400 1,046,900 722,200 583,600
Less: Net cash provided by operating activities 1,732,100 1,054,300 1,179,400 926,800 1,000,700
Less: Net cash (used in) provided by investing activities (1,722,500) (531,100) (595,800) 76,700 (647,200)
Cash-flow-statement-based aggregate accruals 1,493,500 300,200 463,300 (281,300) 230,100
Financial Ratio
Cash-flow-statement-based accruals ratio1 34.21% 8.59% 15.43% -10.36%
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
Abbott Laboratories -3.29% -2.65%
Cigna Group 2.43% -6.53%
CVS Health Corp. -4.20% -2.54%
Danaher Corp. 18.48% 42.90%
Elevance Health Inc. 30.34% 4.96%
Humana Inc. 91.38% 24.85%
Intuitive Surgical Inc. 33.51% 10.64%
Medtronic PLC 0.35% 1.16% -2.45%
UnitedHealth Group Inc. 5.77% 6.56%
Cash-Flow-Statement-Based Accruals Ratio, Sector
Health Care Equipment & Services 5.76% 3.91% 0.43%
Cash-Flow-Statement-Based Accruals Ratio, Industry
Health Care 6.44% 6.57% 3.54%

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

1 2021 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × 1,493,500 ÷ [(4,964,800 + 3,766,700) ÷ 2] = 34.21%

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, Edwards Lifesciences Corp. deteriorated earnings quality from 2020 to 2021.