Paying users zone. Data is covered by 
.
Get 1 month access to Lockheed Martin Corp. for $17.99, or
get full access to entire website for at least 3 months from $49.99.
We accept:
Lockheed Martin Corp. (LMT)
Financial Reporting Quality: Aggregate Accruals
Difficulty: Advanced
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
Lockheed Martin Corp., balance sheet computation of aggregate accruals
USD $ in millions
Based on: 10-K (filing date: 2019-02-08), 10-K (filing date: 2018-02-06), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-24), 10-K (filing date: 2015-02-09).
2018 Calculations
1 Net operating assets = Operating assets – Operating liabilities
= – =
2 Balance-sheet-based aggregate accruals = Net operating assets 2018 – Net operating assets 2017
= – =
3 Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × ÷ [( + ) ÷ 2] =
| 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, Lockheed Martin Corp. deteriorated earnings quality from 2017 to 2018. |
Cash-Flow-Statement-Based Accruals Ratio
Lockheed Martin Corp., cash flow statement computation of aggregate accruals
USD $ in millions
Based on: 10-K (filing date: 2019-02-08), 10-K (filing date: 2018-02-06), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-24), 10-K (filing date: 2015-02-09).
2018 Calculations
1 Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × ÷ [( + ) ÷ 2] =
| 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, Lockheed Martin Corp. improved earnings quality from 2017 to 2018. |