Stock Analysis on Net
Stock Analysis on Net
Microsoft Excel LibreOffice Calc

Newmont Corp. (NYSE:NEM)

Financial Reporting Quality: Aggregate Accruals

Advanced level

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

Newmont Corp., balance sheet computation of aggregate accruals

US$ in millions

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Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Operating Assets
Total assets 41,369  39,974  20,715  20,563  21,031 
Less: Cash and cash equivalents 5,540  2,243  3,397  3,259  2,756 
Less: Current investments 290  237  48  62  56 
Operating assets 35,539  37,494  17,270  17,242  18,219 
Operating Liabilities
Total liabilities 17,490  17,557  9,203  8,933  9,157 
Less: Current lease and other financing obligations 106  100  27  4  — 
Less: Current debt 551  —  626  —  566 
Less: Non-current debt 5,480  6,138  3,418  4,040  4,049 
Less: Non-current lease and other financing obligations 565  596  190  21  — 
Operating liabilities 10,788  10,723  4,942  4,868  4,542 
 
Net operating assets1 24,751  26,771  12,328  12,374  13,677 
Balance-sheet-based aggregate accruals2 (2,020) 14,443  (46) (1,303) — 
Financial Ratio
Balance-sheet-based accruals ratio3 -7.84% 73.88% -0.37% -10.00% —
Benchmarks
Balance-Sheet-Based Accruals Ratio, Industry
Basic Materials -3.93% 8.57% 68.46% -1.58% —

Based on: 10-K (filing date: 2021-02-18), 10-K (filing date: 2020-02-20), 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-22), 10-K (filing date: 2017-02-21).

1 2020 Calculation
Net operating assets = Operating assets – Operating liabilities
= 35,539 – 10,788 = 24,751

2 2020 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2020 – Net operating assets2019
= 24,751 – 26,771 = -2,020

3 2020 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × -2,020 ÷ [(24,751 + 26,771) ÷ 2] = -7.84%

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, Newmont Corp. improved earnings quality from 2019 to 2020.

Cash-Flow-Statement-Based Accruals Ratio

Newmont Corp., cash flow statement computation of aggregate accruals

US$ in millions

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Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Net income (loss) attributable to Newmont stockholders 2,829  2,805  341  (98) (627)
Less: Net cash provided by operating activities 4,890  2,876  1,837  2,350  1,917 
Less: Net cash (used in) provided by investing activities 166  (1,226) (1,177) (961) (34)
Cash-flow-statement-based aggregate accruals (2,227) 1,155  (319) (1,487) (2,510)
Financial Ratio
Cash-flow-statement-based accruals ratio1 -8.64% 5.91% -2.58% -11.42% —
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Industry
Basic Materials -3.56% -2.34% -5.23% 1.90% —

Based on: 10-K (filing date: 2021-02-18), 10-K (filing date: 2020-02-20), 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-22), 10-K (filing date: 2017-02-21).

1 2020 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × -2,227 ÷ [(24,751 + 26,771) ÷ 2] = -8.64%

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, Newmont Corp. deteriorated earnings quality from 2019 to 2020.