Stock Analysis on Net

Medtronic PLC (NYSE:MDT)

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

Medtronic PLC, balance sheet computation of aggregate accruals

US$ in millions

Microsoft Excel
Apr 28, 2023 Apr 29, 2022 Apr 30, 2021 Apr 24, 2020 Apr 26, 2019 Apr 27, 2018
Operating Assets
Total assets 90,948 90,981 93,083 90,689 89,694 91,393
Less: Cash and cash equivalents 1,543 3,714 3,593 4,140 4,393 3,669
Less: Investments 6,416 6,859 7,224 6,808 5,455 7,558
Operating assets 82,989 80,408 82,266 79,741 79,846 80,166
Operating Liabilities
Total liabilities 39,283 38,260 41,481 39,817 39,482 40,571
Less: Current debt obligations 20 3,742 11 2,776 838 2,058
Less: Long-term debt 24,344 20,372 26,378 22,021 24,486 23,699
Operating liabilities 14,919 14,146 15,092 15,020 14,158 14,814
 
Net operating assets1 68,070 66,262 67,174 64,721 65,688 65,352
Balance-sheet-based aggregate accruals2 1,808 (912) 2,453 (967) 336
Financial Ratio
Balance-sheet-based accruals ratio3 2.69% -1.37% 3.72% -1.48% 0.51%
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%
Humana Inc. -11.37% -44.43% 111.97% 18.14%
Intuitive Surgical Inc. 15.55% -10.21% 50.02% -8.55%
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% 200.00%
Balance-Sheet-Based Accruals Ratio, Industry
Health Care 8.00% 2.36% 5.50% 10.57% 200.00%

Based on: 10-K (reporting date: 2023-04-28), 10-K (reporting date: 2022-04-29), 10-K (reporting date: 2021-04-30), 10-K (reporting date: 2020-04-24), 10-K (reporting date: 2019-04-26), 10-K (reporting date: 2018-04-27).

1 2023 Calculation
Net operating assets = Operating assets – Operating liabilities
= 82,98914,919 = 68,070

2 2023 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2023 – Net operating assets2022
= 68,07066,262 = 1,808

3 2023 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × 1,808 ÷ [(68,070 + 66,262) ÷ 2] = 2.69%

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, Medtronic PLC deteriorated earnings quality from 2022 to 2023.

Cash-Flow-Statement-Based Accruals Ratio

Medtronic PLC, cash flow statement computation of aggregate accruals

US$ in millions

Microsoft Excel
Apr 28, 2023 Apr 29, 2022 Apr 30, 2021 Apr 24, 2020 Apr 26, 2019 Apr 27, 2018
Net income attributable to Medtronic 3,758 5,039 3,606 4,789 4,631 3,104
Less: Net cash provided by operating activities 6,039 7,346 6,240 7,234 7,007 4,684
Less: Net cash (used in) provided by investing activities (3,493) (1,659) (2,866) (3,203) (774) 5,858
Cash-flow-statement-based aggregate accruals 1,212 (648) 232 758 (1,602) (7,438)
Financial Ratio
Cash-flow-statement-based accruals ratio1 1.80% -0.97% 0.35% 1.16% -2.45%
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%
Humana Inc. 26.92% -7.68% 91.38% 24.85%
Intuitive Surgical Inc. 4.54% -20.88% 33.51% 10.64%
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% 0.43%
Cash-Flow-Statement-Based Accruals Ratio, Industry
Health Care 8.56% 2.29% 6.44% 6.57% 3.54%

Based on: 10-K (reporting date: 2023-04-28), 10-K (reporting date: 2022-04-29), 10-K (reporting date: 2021-04-30), 10-K (reporting date: 2020-04-24), 10-K (reporting date: 2019-04-26), 10-K (reporting date: 2018-04-27).

1 2023 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × 1,212 ÷ [(68,070 + 66,262) ÷ 2] = 1.80%

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, Medtronic PLC deteriorated earnings quality from 2022 to 2023.