Stock Analysis on Net

Sherwin-Williams Co. (NYSE:SHW)

This company has been moved to the archive! The financial data has not been updated since July 27, 2022.

Financial Reporting Quality: Aggregate Accruals

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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

Sherwin-Williams Co., balance sheet computation of aggregate accruals

US$ in thousands

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Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Operating Assets
Total assets 20,666,700 20,401,600 20,496,200 19,134,279 19,958,427
Less: Cash and cash equivalents 165,700 226,600 161,800 155,505 204,213
Operating assets 20,501,000 20,175,000 20,334,400 18,978,774 19,754,214
Operating Liabilities
Total liabilities 18,229,500 16,790,800 16,372,900 15,403,534 16,266,239
Less: Short-term borrowings 763,500 100 204,700 328,403 633,731
Less: Current portion of long-term debt 260,600 25,100 429,800 307,191 1,179
Less: Long-term debt, excluding current portion 8,590,900 8,266,900 8,050,700 8,708,057 9,885,745
Operating liabilities 8,614,500 8,498,700 7,687,700 6,059,883 5,745,584
 
Net operating assets1 11,886,500 11,676,300 12,646,700 12,918,891 14,008,630
Balance-sheet-based aggregate accruals2 210,200 (970,400) (272,191) (1,089,739)
Financial Ratio
Balance-sheet-based accruals ratio3 1.78% -7.98% -2.13% -8.09%
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
Linde plc -8.63% -1.19%
Balance-Sheet-Based Accruals Ratio, Industry
Materials -6.60% -2.91% 200.00%

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

1 2021 Calculation
Net operating assets = Operating assets – Operating liabilities
= 20,501,0008,614,500 = 11,886,500

2 2021 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2021 – Net operating assets2020
= 11,886,50011,676,300 = 210,200

3 2021 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × 210,200 ÷ [(11,886,500 + 11,676,300) ÷ 2] = 1.78%

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, Sherwin-Williams Co. improved earnings quality from 2020 to 2021.

Cash-Flow-Statement-Based Accruals Ratio

Sherwin-Williams Co., cash flow statement computation of aggregate accruals

US$ in thousands

Microsoft Excel
Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Net income 1,864,400 2,030,400 1,541,300 1,108,746 1,772,262
Less: Net operating cash 2,244,600 3,408,600 2,321,300 1,943,700 1,883,968
Less: Net investing cash (476,400) (322,400) (462,600) (251,640) (9,047,362)
Cash-flow-statement-based aggregate accruals 96,200 (1,055,800) (317,400) (583,314) 8,935,656
Financial Ratio
Cash-flow-statement-based accruals ratio1 0.82% -8.68% -2.48% -4.33%
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
Linde plc -4.85% -3.11%
Cash-Flow-Statement-Based Accruals Ratio, Industry
Materials -5.15% -4.70% -6.07%

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

1 2021 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × 96,200 ÷ [(11,886,500 + 11,676,300) ÷ 2] = 0.82%

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, Sherwin-Williams Co. improved earnings quality from 2020 to 2021.