Financial Reporting Quality: Aggregate Accruals
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.
Paying user area
Try for free
Ford Motor Co. pages available for free this week:
- Common-Size Balance Sheet: Assets
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Solvency Ratios
- Analysis of Reportable Segments
- Price to FCFE (P/FCFE)
- Capital Asset Pricing Model (CAPM)
- Dividend Discount Model (DDM)
- Return on Assets (ROA) since 2005
- Current Ratio since 2005
- Price to Book Value (P/BV) since 2005
The data is hidden behind: . Unhide it.
Get full access to the entire website from $10.42/mo, or
get 1-month access to Ford Motor Co. for $24.99.
This is a one-time payment. There is no automatic renewal.
We accept:
Balance-Sheet-Based Accruals Ratio
Ford Motor Co., balance sheet computation of aggregate accruals
US$ in millions
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Operating Assets | ||||||
| Total assets | ||||||
| Less: Cash and cash equivalents | ||||||
| Less: Marketable securities | ||||||
| Operating assets | ||||||
| Operating Liabilities | ||||||
| Total liabilities | ||||||
| Less: Debt payable within one year | ||||||
| Less: Long-term debt payable after one year | ||||||
| Operating liabilities | ||||||
| Net operating assets1 | ||||||
| Balance-sheet-based aggregate accruals2 | ||||||
| Financial Ratio | ||||||
| Balance-sheet-based accruals ratio3 | ||||||
| Benchmarks | ||||||
| Balance-Sheet-Based Accruals Ratio, Competitors4 | ||||||
| General Motors Co. | ||||||
| Tesla Inc. | ||||||
| Balance-Sheet-Based Accruals Ratio, Sector | ||||||
| Automobiles & Components | ||||||
| Balance-Sheet-Based Accruals Ratio, Industry | ||||||
| Consumer Discretionary | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
Net operating assets = Operating assets – Operating liabilities
= – =
2 2025 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2025 – Net operating assets2024
= – =
3 2025 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.
The reported net operating assets demonstrate a generally increasing trend over the observed period, beginning at US$138,066 million in 2022 and reaching US$165,032 million in 2024 before slightly decreasing to US$160,829 million in 2025. However, the balance-sheet-based aggregate accruals and the corresponding accruals ratio exhibit significant fluctuations, warranting further investigation.
- Balance-Sheet-Based Aggregate Accruals
- Balance-sheet-based aggregate accruals were relatively low in 2022 at US$945 million. A substantial increase is observed in 2023, rising to US$13,792 million. While remaining elevated in 2024 at US$13,174 million, accruals experienced a dramatic shift in 2025, becoming negative at -US$4,203 million. This suggests a reversal of prior accruals or a significant reduction in the creation of new accruals.
- Balance-Sheet-Based Accruals Ratio
- The balance-sheet-based accruals ratio mirrors the trend in aggregate accruals. Starting at 0.69% in 2022, the ratio increased sharply to 9.51% in 2023 and remained high at 8.31% in 2024. The ratio then experienced a substantial decline, becoming negative in 2025 at -2.58%. This negative value indicates that cash flows from operations exceeded reported net income when considered in relation to net operating assets.
The significant increase in both aggregate accruals and the accruals ratio in 2023 and 2024, followed by a reversal in 2025, could indicate aggressive revenue recognition or delayed expense recognition in the earlier periods, corrected in the later period. The negative accruals ratio in 2025 is a notable change and may suggest improved cash flow generation relative to reported earnings, or potentially, a conservative approach to accruals. Further investigation into the underlying components of these accruals is recommended to determine the drivers of these fluctuations and assess the quality of earnings.
Cash-Flow-Statement-Based Accruals Ratio
Ford Motor Co., cash flow statement computation of aggregate accruals
US$ in millions
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Net income (loss) attributable to Ford Motor Company | ||||||
| Less: Net cash provided by operating activities | ||||||
| Less: Net cash (used in) provided by investing activities | ||||||
| Cash-flow-statement-based aggregate accruals | ||||||
| Financial Ratio | ||||||
| Cash-flow-statement-based accruals ratio1 | ||||||
| Benchmarks | ||||||
| Cash-Flow-Statement-Based Accruals Ratio, Competitors2 | ||||||
| General Motors Co. | ||||||
| Tesla Inc. | ||||||
| Cash-Flow-Statement-Based Accruals Ratio, Sector | ||||||
| Automobiles & Components | ||||||
| Cash-Flow-Statement-Based Accruals Ratio, Industry | ||||||
| Consumer Discretionary | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 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 net operating assets exhibited a consistent increase from 2022 to 2024, reaching 165,032 US$ in millions, before experiencing a slight decrease in 2025 to 160,829 US$ in millions. However, the cash-flow-statement-based aggregate accruals demonstrate significant volatility over the observed period. The cash-flow-statement-based accruals ratio, calculated from these figures, reflects this fluctuation and warrants further investigation.
- Cash-Flow-Statement-Based Aggregate Accruals
- In 2022, cash-flow-statement-based aggregate accruals were negative, registering at -4,487 US$ in millions. This shifted dramatically to positive values in subsequent years, peaking at 14,826 US$ in millions in 2024. A substantial decline is then observed in 2025, with accruals becoming negative again at -11,415 US$ in millions. This pattern suggests considerable changes in the timing of cash receipts and payments relative to reported earnings.
- Cash-Flow-Statement-Based Accruals Ratio
- The accruals ratio mirrored the trend in aggregate accruals. It began at -3.26% in 2022, indicating accruals reduced net operating assets. The ratio increased to 4.87% in 2023 and continued to rise to 9.36% in 2024, suggesting a growing reliance on accruals to support reported earnings. The ratio then decreased sharply to -7.01% in 2025, indicating a significant reversal and a reduction in the contribution of accruals to net operating assets. The volatility in this ratio could signal potential earnings management or changes in the company’s operating cycle. A negative ratio in 2025 suggests that cash flows from operations were greater than reported earnings, potentially due to conservative accounting practices or a slowdown in revenue recognition.
The substantial fluctuations in both aggregate accruals and the accruals ratio highlight a need for deeper scrutiny. Further analysis should focus on understanding the underlying drivers of these changes, including examining specific accrual components and comparing them to industry peers. The shift from positive to negative accruals in 2025, coupled with the decrease in net operating assets, requires particular attention to assess the sustainability of earnings and the quality of financial reporting.