Stock Analysis on Net

HP Inc. (NYSE:HPQ)

This company has been moved to the archive! The financial data has not been updated since August 29, 2019.

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

HP Inc., balance sheet computation of aggregate accruals

US$ in millions

Microsoft Excel
Oct 31, 2018 Oct 31, 2017 Oct 31, 2016 Oct 31, 2015 Oct 31, 2014 Oct 31, 2013
Operating Assets
Total assets 34,622 32,913 29,010 106,882 103,206 105,676
Less: Cash and cash equivalents 5,166 6,997 6,288 17,433 15,133 12,163
Operating assets 29,456 25,916 22,722 89,449 88,073 93,513
Operating Liabilities
Total liabilities 35,261 36,321 32,899 78,731 76,079 78,020
Less: Notes payable and short-term borrowings 1,463 1,072 78 2,885 3,486 5,979
Less: Long-term debt, excluding current portion 4,524 6,747 6,758 21,780 16,039 16,608
Operating liabilities 29,274 28,502 26,063 54,066 56,554 55,433
 
Net operating assets1 182 (2,586) (3,341) 35,383 31,519 38,080
Balance-sheet-based aggregate accruals2 2,768 755 (38,724) 3,864 (6,561)
Financial Ratio
Balance-sheet-based accruals ratio3 -241.71% 11.55% -18.85%
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
Apple Inc.
Arista Networks Inc.
Cisco Systems Inc.
Super Micro Computer Inc.

Based on: 10-K (reporting date: 2018-10-31), 10-K (reporting date: 2017-10-31), 10-K (reporting date: 2016-10-31), 10-K (reporting date: 2015-10-31), 10-K (reporting date: 2014-10-31), 10-K (reporting date: 2013-10-31).

1 2018 Calculation
Net operating assets = Operating assets – Operating liabilities
= 29,45629,274 = 182

2 2018 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2018 – Net operating assets2017
= 182-2,586 = 2,768

3 2018 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × 2,768 ÷ [(182 + -2,586) ÷ 2] =

4 Click competitor name to see calculations.


Cash-Flow-Statement-Based Accruals Ratio

HP Inc., cash flow statement computation of aggregate accruals

US$ in millions

Microsoft Excel
Oct 31, 2018 Oct 31, 2017 Oct 31, 2016 Oct 31, 2015 Oct 31, 2014 Oct 31, 2013
Net earnings 5,327 2,526 2,496 4,554 5,013 5,113
Less: Net cash provided by operating activities 4,528 3,677 3,230 6,490 12,333 11,608
Less: Net cash (used in) provided by investing activities (716) (1,717) 48 (5,534) (2,792) (2,803)
Cash-flow-statement-based aggregate accruals 1,515 566 (782) 3,598 (4,528) (3,692)
Financial Ratio
Cash-flow-statement-based accruals ratio1 -4.88% 10.76% -13.01%
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
Apple Inc.
Arista Networks Inc.
Cisco Systems Inc.
Super Micro Computer Inc.

Based on: 10-K (reporting date: 2018-10-31), 10-K (reporting date: 2017-10-31), 10-K (reporting date: 2016-10-31), 10-K (reporting date: 2015-10-31), 10-K (reporting date: 2014-10-31), 10-K (reporting date: 2013-10-31).

1 2018 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × 1,515 ÷ [(182 + -2,586) ÷ 2] =

2 Click competitor name to see calculations.