Stock Analysis on Net
Stock Analysis on Net

Medtronic PLC (NYSE:MDT)

Financial Reporting Quality: Aggregate Accruals

Microsoft Excel LibreOffice Calc

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 LibreOffice Calc
Apr 30, 2021 Apr 24, 2020 Apr 26, 2019 Apr 27, 2018 Apr 28, 2017 Apr 29, 2016
Operating Assets
Total assets 93,083  90,689  89,694  91,393  99,816  99,782 
Less: Cash and cash equivalents 3,593  4,140  4,393  3,669  4,967  2,876 
Less: Investments 7,224  6,808  5,455  7,558  8,741  9,758 
Operating assets 82,266  79,741  79,846  80,166  86,108  87,148 
Operating Liabilities
Total liabilities 41,481  39,817  39,482  40,571  49,400  47,719 
Less: Current debt obligations 11  2,776  838  2,058  7,520  993 
Less: Long-term debt 26,378  22,021  24,486  23,699  25,921  30,247 
Operating liabilities 15,092  15,020  14,158  14,814  15,959  16,479 
 
Net operating assets1 67,174  64,721  65,688  65,352  70,149  70,669 
Balance-sheet-based aggregate accruals2 2,453  (967) 336  (4,797) (520) — 
Financial Ratio
Balance-sheet-based accruals ratio3 3.72% -1.48% 0.51% -7.08% -0.74%
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
Abbott Laboratories -1.55% -1.97% -6.71% 69.42%
Anthem Inc. -15.16% 2.15% 15.94% 18.66%
Becton, Dickinson & Co. -2.78% -3.42% 80.26% 0.01% -5.12%
Bristol-Myers Squibb Co. -13.24% 147.33% -3.17% -24.97%
CVS Health Corp. -0.89% -0.64% 66.39% 3.20%
Danaher Corp. 52.50% -14.67% 2.50% 5.32%
Edwards Lifesciences Corp. 15.47% 14.93% 4.51% 20.10%
HCA Healthcare Inc. -1.34% 10.12% 7.30% 8.52%
Intuitive Surgical Inc. -8.55% 33.12% 26.86% -15.26%
Stryker Corp. 21.04% 8.47% 21.55% 9.67%
UnitedHealth Group Inc. 5.27% 12.54% 14.66% 13.69%
Balance-Sheet-Based Accruals Ratio, Sector
Health Care Equipment & Services 0.00% 2.44% 15.28% 22.92% 11.23%
Balance-Sheet-Based Accruals Ratio, Industry
Health Care 0.00% 11.00% 12.62% 7.35% 8.99%

Based on: 10-K (filing date: 2021-06-25), 10-K (filing date: 2020-06-19), 10-K (filing date: 2019-06-21), 10-K (filing date: 2018-06-22), 10-K (filing date: 2017-06-27), 10-K (filing date: 2016-06-28).

1 2021 Calculation
Net operating assets = Operating assets – Operating liabilities
= 82,26615,092 = 67,174

2 2021 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2021 – Net operating assets2020
= 67,17464,721 = 2,453

3 2021 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × 2,453 ÷ [(67,174 + 64,721) ÷ 2] = 3.72%

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 2020 to 2021.

Cash-Flow-Statement-Based Accruals Ratio

Medtronic PLC, cash flow statement computation of aggregate accruals

US$ in millions

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Apr 30, 2021 Apr 24, 2020 Apr 26, 2019 Apr 27, 2018 Apr 28, 2017 Apr 29, 2016
Net income attributable to Medtronic 3,606  4,789  4,631  3,104  4,028  3,538 
Less: Net cash provided by operating activities 6,240  7,234  7,007  4,684  6,880  5,218 
Less: Net cash (used in) provided by investing activities (2,866) (3,203) (774) 5,858  (1,571) 2,245 
Cash-flow-statement-based aggregate accruals 232  758  (1,602) (7,438) (1,281) (3,925)
Financial Ratio
Cash-flow-statement-based accruals ratio1 0.35% 1.16% -2.45% -10.98% -1.82%
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
Abbott Laboratories -2.65% -1.39% -5.39% 12.34%
Anthem Inc. 4.96% 5.94% 4.98% 23.72%
Becton, Dickinson & Co. -3.65% -3.34% 45.11% -3.22% -5.06%
Bristol-Myers Squibb Co. -15.67% 10.75% -1.14% -28.29%
CVS Health Corp. -2.54% -2.30% 35.93% 2.50%
Danaher Corp. 42.90% 1.49% 4.30% -0.40%
Edwards Lifesciences Corp. 8.59% 15.43% -10.36% 9.54%
HCA Healthcare Inc. -6.45% 5.24% 3.27% 4.08%
Intuitive Surgical Inc. 10.64% 21.54% 31.54% -28.80%
Stryker Corp. 13.89% 7.21% 23.53% 7.81%
UnitedHealth Group Inc. 6.56% 10.03% 12.32% 9.12%
Cash-Flow-Statement-Based Accruals Ratio, Sector
Health Care Equipment & Services 0.00% 1.79% 2.52% 12.43% 3.22%
Cash-Flow-Statement-Based Accruals Ratio, Industry
Health Care 0.00% 6.77% 2.47% -1.08% 1.86%

Based on: 10-K (filing date: 2021-06-25), 10-K (filing date: 2020-06-19), 10-K (filing date: 2019-06-21), 10-K (filing date: 2018-06-22), 10-K (filing date: 2017-06-27), 10-K (filing date: 2016-06-28).

1 2021 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × 232 ÷ [(67,174 + 64,721) ÷ 2] = 0.35%

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 improved earnings quality from 2020 to 2021.