Stock Analysis on Net
Stock Analysis on Net

GameStop Corp. (NYSE:GME)

$22.49

This company has been moved to the archive! The financial data has not been updated since June 11, 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

GameStop Corp., balance sheet computation of aggregate accruals

US$ in thousands

Microsoft Excel
Feb 3, 2024 Jan 28, 2023 Jan 29, 2022 Jan 30, 2021 Feb 1, 2020 Feb 2, 2019
Operating Assets
Total assets
Less: Cash and cash equivalents
Less: Marketable securities
Operating assets
Operating Liabilities
Total liabilities
Less: Current portion of long-term debt
Less: Borrowings under revolving line of credit
Less: Long-term debt, 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
Amazon.com Inc.
Home Depot Inc.
Lowe’s Cos. Inc.
TJX Cos. Inc.
Balance-Sheet-Based Accruals Ratio, Sector
Consumer Discretionary Distribution & Retail
Balance-Sheet-Based Accruals Ratio, Industry
Consumer Discretionary

Based on: 10-K (reporting date: 2024-02-03), 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02).

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 show a significant fluctuation over the observed periods. Initially, the value was considerably positive at 531,900 thousand USD in early 2020, followed by a sharp decline to 290,900 thousand USD in early 2021. The figure then increased to 375,700 thousand USD in early 2022 before reversing dramatically to a negative 28,800 thousand USD by early 2023. The most recent data from early 2024 shows a recovery to 167,800 thousand USD, though still below values seen prior to 2023.
Balance-Sheet-Based Aggregate Accruals
The aggregate accruals exhibit volatility with wide swings between positive and negative values. Starting from a minimal negative amount of -700 thousand USD in 2020, accruals plunged to a large negative value of -241,000 thousand USD in 2021. There was a rebound to a positive 84,800 thousand USD in 2022, followed by an even larger negative accrual of -404,500 thousand USD in 2023. By 2024, aggregate accruals moved back to a substantial positive amount of 196,600 thousand USD.
Balance-Sheet-Based Accruals Ratio
The accruals ratio mirrors the volatility observed in aggregate accruals, expressed as a percentage of net operating assets. It began slightly negative at -0.13% in 2020, sharply decreasing to -58.58% in 2021. The ratio turned positive to 25.44% in 2022, followed by a steep decline to -233.21% in 2023. By 2024, it rose dramatically to a positive 282.88%. These wide fluctuations suggest significant variability in accrual-based earnings quality relative to the asset base during the observed periods.
Overall Insights
The data indicates periods of substantial instability in financial reporting quality measures related to accruals and net operating assets. The alternating signs and wide magnitude swings in both aggregate accruals and the accruals ratio reflect inconsistent earnings quality and possible challenges in managing or recognizing operating assets effectively. The negative net operating assets observed in early 2023, coupled with extreme accruals ratio values, merit attention as potential indicators of financial distress or unusual accounting activities during that period. The partial recovery in 2024 suggests an improvement but still indicates elevated volatility compared to the baseline year 2020.

Cash-Flow-Statement-Based Accruals Ratio

GameStop Corp., cash flow statement computation of aggregate accruals

US$ in thousands

Microsoft Excel
Feb 3, 2024 Jan 28, 2023 Jan 29, 2022 Jan 30, 2021 Feb 1, 2020 Feb 2, 2019
Net income (loss)
Less: Net cash flows provided by (used in) operating activities
Less: Net cash flows (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
Amazon.com Inc.
Home Depot Inc.
Lowe’s Cos. Inc.
TJX Cos. Inc.
Cash-Flow-Statement-Based Accruals Ratio, Sector
Consumer Discretionary Distribution & Retail
Cash-Flow-Statement-Based Accruals Ratio, Industry
Consumer Discretionary

Based on: 10-K (reporting date: 2024-02-03), 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02).

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.

Net Operating Assets
The net operating assets show a fluctuating pattern over the five-year period. Initially, the value was significantly positive at 531,900 thousand US dollars in 2020, then sharply declined to 290,900 thousand in 2021. It slightly recovered to 375,700 thousand in 2022 before dropping into a negative figure of -28,800 thousand in 2023. In 2024, it returned to a positive value of 167,800 thousand, indicating some recovery but still well below the initial levels in 2020.
Cash-Flow-Statement-Based Aggregate Accruals
The aggregate accruals demonstrate considerable volatility and large swings, with both positive and negative values recorded. It started with a modest positive 4,500 thousand in 2020, then plunged to a substantial negative level of -375,900 thousand in 2021. In 2022, it rebounded to a positive 117,800 thousand, dropped back to a negative -198,600 thousand in 2023, and climbed again to a positive 243,600 thousand in 2024. This volatility suggests inconsistent accrual quality or fluctuations in operating cash flows relative to earnings.
Cash-Flow-Statement-Based Accruals Ratio
The accruals ratio is marked by extreme variability, exhibiting sharp shifts between negative and positive values. In 2020, it was a low positive 0.85%, followed by a dramatic decline to -91.37% in 2021, then a rise to 35.34% in 2022. In 2023, the ratio reached a negative peak of -114.5%, indicating large accruals relative to cash flow, before surging to a substantial positive 350.5% in 2024. Such large swings indicate fluctuations in the relationship between reported accruals and operating cash flow, which may affect the reliability of reported earnings over the years.