Stock Analysis on Net

Humana Inc. (NYSE:HUM)

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

Humana Inc., balance sheet computation of aggregate accruals

US$ in millions

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Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Operating Assets
Total assets 47,065 43,055 44,358 34,969 29,074
Less: Cash and cash equivalents 4,694 5,061 3,394 4,673 4,054
Less: Investment securities 16,626 13,881 13,192 12,554 10,972
Operating assets 25,745 24,113 27,772 17,742 14,048
Operating Liabilities
Total liabilities 30,747 27,685 28,255 21,241 17,037
Less: Book overdraft 353 298 326 320 225
Less: Short-term debt 1,443 2,092 1,953 600 699
Less: Long-term debt 10,213 9,034 10,541 6,060 4,967
Operating liabilities 18,738 16,261 15,435 14,261 11,146
 
Net operating assets1 7,007 7,852 12,337 3,481 2,902
Balance-sheet-based aggregate accruals2 (845) (4,485) 8,856 579
Financial Ratio
Balance-sheet-based accruals ratio3 -11.37% -44.43% 111.97% 18.14%
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
Abbott Laboratories 6.06% -0.73% -1.76% -1.55%
Cigna Group -0.99% -7.83% 4.17% -7.30%
CVS Health Corp. 16.15% -9.86% -3.68% -0.89%
Danaher Corp. 3.48% -1.55% 16.41% 52.50%
Elevance Health Inc. 7.14% 0.32% 14.93% -15.16%
Intuitive Surgical Inc. 15.55% -10.21% 50.02% -8.55%
Medtronic PLC 2.69% -1.37% 3.72% -1.48% 0.51%
UnitedHealth Group Inc. 13.41% 17.32% 4.32% 5.27%
Balance-Sheet-Based Accruals Ratio, Sector
Health Care Equipment & Services 8.27% -1.25% 5.99% 3.33%
Balance-Sheet-Based Accruals Ratio, Industry
Health Care 8.00% 2.36% 5.50% 10.57%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

1 2023 Calculation
Net operating assets = Operating assets – Operating liabilities
= 25,74518,738 = 7,007

2 2023 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2023 – Net operating assets2022
= 7,0077,852 = -845

3 2023 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × -845 ÷ [(7,007 + 7,852) ÷ 2] = -11.37%

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, Humana Inc. improved earnings quality from 2022 to 2023.

Cash-Flow-Statement-Based Accruals Ratio

Humana Inc., cash flow statement computation of aggregate accruals

US$ in millions

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Net income attributable to Humana 2,489 2,806 2,933 3,367 2,707
Less: Net cash provided by operating activities 3,981 4,587 2,262 5,639 5,284
Less: Net cash used in investing activities (3,492) (1,006) (6,556) (3,065) (1,278)
Cash-flow-statement-based aggregate accruals 2,000 (775) 7,227 793 (1,299)
Financial Ratio
Cash-flow-statement-based accruals ratio1 26.92% -7.68% 91.38% 24.85%
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
Abbott Laboratories 3.55% -2.08% -3.29% -2.65%
Cigna Group -2.14% -7.06% 2.43% -6.53%
CVS Health Corp. 13.47% -6.15% -4.20% -2.54%
Danaher Corp. 8.20% 1.44% 18.48% 42.90%
Elevance Health Inc. 12.87% 8.35% 30.34% 4.96%
Intuitive Surgical Inc. 4.54% -20.88% 33.51% 10.64%
Medtronic PLC 1.80% -0.97% 0.35% 1.16% -2.45%
UnitedHealth Group Inc. 7.40% 21.73% 5.77% 6.56%
Cash-Flow-Statement-Based Accruals Ratio, Sector
Health Care Equipment & Services 7.08% 1.89% 5.76% 3.91%
Cash-Flow-Statement-Based Accruals Ratio, Industry
Health Care 8.56% 2.29% 6.44% 6.57%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

1 2023 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × 2,000 ÷ [(7,007 + 7,852) ÷ 2] = 26.92%

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, Humana Inc. deteriorated earnings quality from 2022 to 2023.