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

Norfolk Southern Corp. (NYSE:NSC)

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

Norfolk Southern Corp., balance sheet computation of aggregate accruals

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Operating Assets
Total assets 37,923  36,239  35,711  34,892  34,260 
Less: Cash and cash equivalents 580  358  690  956  1,101 
Operating assets 37,343  35,881  35,021  33,936  33,159 
Operating Liabilities
Total liabilities 22,739  20,877  19,352  22,483  22,072 
Less: Short-term debt —  —  100  100  200 
Less: Current maturities of long-term debt 316  585  600  550  500 
Less: Long-term debt, excluding current maturities 11,880  10,560  9,136  9,562  9,393 
Operating liabilities 10,543  9,732  9,516  12,271  11,979 
 
Net operating assets1 26,800  26,149  25,505  21,665  21,180 
Balance-sheet-based aggregate accruals2 651  644  3,840  485 
Financial Ratio
Balance-sheet-based accruals ratio3 2.46% 2.49% 16.28% 2.26%
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
CSX Corp. -0.30% 0.44% 17.24% 4.82%
FedEx Corp. 0.86% 19.08% 11.41% 26.37%
Union Pacific Corp. 2.28% 2.48% 18.50% 0.45%
United Parcel Service Inc. 9.38% -2.44% 56.12% -1.35%
Balance-Sheet-Based Accruals Ratio, Sector
Industrial Transportation 2.58% 4.84% 21.34% 6.49%
Balance-Sheet-Based Accruals Ratio, Industry
Industrials -7.34% 4.17% 12.07% -15.51%

Based on: 10-K (filing date: 2020-02-06), 10-K (filing date: 2019-02-08), 10-K (filing date: 2018-02-05), 10-K (filing date: 2017-02-06), 10-K (filing date: 2016-02-08).

1 2019 Calculation
Net operating assets = Operating assets – Operating liabilities
= 37,34310,543 = 26,800

2 2019 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2019 – Net operating assets2018
= 26,80026,149 = 651

3 2019 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × 651 ÷ [(26,800 + 26,149) ÷ 2] = 2.46%

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, Norfolk Southern Corp. improved earnings quality from 2018 to 2019.

Cash-Flow-Statement-Based Accruals Ratio

Norfolk Southern Corp., cash flow statement computation of aggregate accruals

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Net income 2,722  2,666  5,404  1,668  1,556 
Less: Net cash provided by operating activities 3,892  3,726  3,253  3,034  2,877 
Less: Net cash used in investing activities (1,764) (1,658) (1,481) (1,832) (2,087)
Cash-flow-statement-based aggregate accruals 594  598  3,632  466  766 
Financial Ratio
Cash-flow-statement-based accruals ratio1 2.24% 2.32% 15.40% 2.18%
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
CSX Corp. 2.23% 1.35% 14.53% 2.20%
FedEx Corp. 1.22% 18.65% 11.92% 26.08%
Union Pacific Corp. 1.77% 1.68% 17.71% 0.30%
United Parcel Service Inc. 8.56% -7.57% 50.66% -3.96%
Cash-Flow-Statement-Based Accruals Ratio, Sector
Industrial Transportation 2.80% 3.91% 19.82% 5.57%
Cash-Flow-Statement-Based Accruals Ratio, Industry
Industrials -2.48% -0.18% -0.06% -9.60%

Based on: 10-K (filing date: 2020-02-06), 10-K (filing date: 2019-02-08), 10-K (filing date: 2018-02-05), 10-K (filing date: 2017-02-06), 10-K (filing date: 2016-02-08).

1 2019 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × 594 ÷ [(26,800 + 26,149) ÷ 2] = 2.24%

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, Norfolk Southern Corp. improved earnings quality from 2018 to 2019.