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.
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TJX Cos. Inc. pages available for free this week:
- Common-Size Balance Sheet: Assets
- Analysis of Liquidity Ratios
- Analysis of Short-term (Operating) Activity Ratios
- Price to FCFE (P/FCFE)
- Present Value of Free Cash Flow to Equity (FCFE)
- Selected Financial Data since 2005
- Net Profit Margin since 2005
- Return on Assets (ROA) since 2005
- Price to Book Value (P/BV) since 2005
- Analysis of Debt
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Balance-Sheet-Based Accruals Ratio
Feb 1, 2025 | Feb 3, 2024 | Jan 28, 2023 | Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | ||
---|---|---|---|---|---|---|---|
Operating Assets | |||||||
Total assets | |||||||
Less: Cash and cash equivalents | |||||||
Operating assets | |||||||
Operating Liabilities | |||||||
Total liabilities | |||||||
Less: Current portion of long-term debt | |||||||
Less: Long-term debt, excluding current portion | |||||||
Operating liabilities | |||||||
Net operating assets1 | |||||||
Balance-sheet-based aggregate accruals2 | |||||||
Financial Ratio | |||||||
Balance-sheet-based accruals ratio3 | |||||||
Benchmarks | |||||||
Balance-Sheet-Based Accruals Ratio, Competitors4 | |||||||
Amazon.com Inc. | |||||||
Home Depot Inc. | |||||||
Lowe’s Cos. Inc. | |||||||
Balance-Sheet-Based Accruals Ratio, Sector | |||||||
Consumer Discretionary Distribution & Retail | |||||||
Balance-Sheet-Based Accruals Ratio, Industry | |||||||
Consumer Discretionary |
Based on: 10-K (reporting date: 2025-02-01), 10-K (reporting date: 2024-02-03), 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01).
1 2025 Calculation
Net operating assets = Operating assets – Operating liabilities
= – =
2 2025 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2025 – Net operating assets2024
= – =
3 2025 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × ÷ [( + ) ÷ 2] =
4 Click competitor name to see calculations.
The analysis of the financial data over the periods from January 30, 2021, to February 1, 2025, reveals several notable trends regarding net operating assets and accruals measures.
- Net Operating Assets
- The net operating assets exhibit a consistent upward trend throughout the examined periods. Starting at US$1,446 million in early 2021, the figure more than doubles to US$3,131 million by early 2022, then continues to increase to US$4,246 million in early 2023. The growth persists, reaching US$4,564 million in early 2024 and culminating at US$5,924 million in early 2025. This steady increase suggests an expansion in operating resources or investments, which could indicate growth or increased capital deployment over time.
- Balance-sheet-based Aggregate Accruals
- The balance-sheet-based aggregate accruals display a notable reversal in sign and magnitude over the periods. The value starts negative at -US$3,522 million in 2021, shifts sharply to a positive US$1,685 million in 2022, and then decreases moderately to US$1,115 million in 2023. A further decline occurs in 2024 to US$318 million before rising again to US$1,360 million in 2025. The initial large negative accruals suggest significant adjustments or timing differences in operating expenses or revenues, while subsequent positive accruals indicate a change in the company's accrual policies or operational dynamics. The volatility in this measure reflects fluctuations in earnings quality or cash flow timing.
- Balance-sheet-based Accruals Ratio
- The accruals ratio mirrors the pattern observed in aggregate accruals but expressed as a percentage of relevant balances. Beginning at a negative 109.84% in 2021, it turns positive to 73.65% in 2022, then declines to 30.23% in 2023. This figure further reduces to 7.22% in 2024, indicating a substantial decrease in accrual activity relative to the base. However, in 2025, the ratio increases again to 25.93%. The initial negative ratio followed by positive values and subsequent fluctuations suggests variable reliance on accruals in earnings, potentially impacting the sustainability or quality of reported earnings over these periods.
Overall, the data indicate an expanding asset base coupled with fluctuating accrual measures, signifying changing financial reporting characteristics and possibly evolving operational or accounting strategies over the reviewed five-year span.
Cash-Flow-Statement-Based Accruals Ratio
Feb 1, 2025 | Feb 3, 2024 | Jan 28, 2023 | Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | ||
---|---|---|---|---|---|---|---|
Net income | |||||||
Less: Net cash provided by operating activities | |||||||
Less: Net cash used in investing activities | |||||||
Cash-flow-statement-based aggregate accruals | |||||||
Financial Ratio | |||||||
Cash-flow-statement-based accruals ratio1 | |||||||
Benchmarks | |||||||
Cash-Flow-Statement-Based Accruals Ratio, Competitors2 | |||||||
Amazon.com Inc. | |||||||
Home Depot Inc. | |||||||
Lowe’s Cos. Inc. | |||||||
Cash-Flow-Statement-Based Accruals Ratio, Sector | |||||||
Consumer Discretionary Distribution & Retail | |||||||
Cash-Flow-Statement-Based Accruals Ratio, Industry | |||||||
Consumer Discretionary |
Based on: 10-K (reporting date: 2025-02-01), 10-K (reporting date: 2024-02-03), 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01).
1 2025 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × ÷ [( + ) ÷ 2] =
2 Click competitor name to see calculations.
The data reveals notable trends in financial reporting quality over the examined periods. An initial observation is the steady increase in net operating assets, which rose consistently from US$1,446 million in early 2021 to US$5,924 million by early 2025. This upward trajectory indicates an expansion in the company's operating asset base over time.
Regarding the cash-flow-statement-based aggregate accruals, a significant shift is evident. In January 2021, the figure was substantially negative at -US$3,893 million, suggesting a strong cash flow generation exceeding net income or a possible reversal of prior accruals. This shifted markedly in the subsequent year to a positive US$1,272 million, followed by fluctuations in the years after, with values of US$884 million, US$134 million, and US$1,225 million, respectively. The pattern suggests variability in the accruals component of cash flows, possibly reflecting changes in earnings quality or accounting judgment.
The cash-flow-statement-based accruals ratio shows a corresponding trend with an extreme negative value of -121.39% in early 2021, indicating cash flows were substantially higher than net income or that accrual adjustments were large and negative. This ratio normalized markedly in the following year to 55.57%, then declined sharply to 23.97% in early 2023 and further decreased to 3.04% by early 2024. The ratio increased again to 23.36% in early 2025. This fluctuation suggests changes in the proportion of accruals relative to cash flows, which may imply variability in earnings quality or the timing of revenue and expense recognition across periods.
Overall, the data portrays a company increasing its operating asset base while experiencing considerable variability in accruals and their relation to cash flows. The fluctuating accruals ratio points to shifting drivers in earnings quality, with potential implications for the predictability and reliability of reported earnings over the years.