Target Corp. (NYSE:TGT)

The financial reporting quality measures for the analyzed periods demonstrate notable variations and trends in net operating assets, balance-sheet-based aggregate accruals, and accruals ratios.

Net Operating Assets

The net operating assets exhibit a consistent upward trajectory over the years, increasing from approximately $18.6 billion in early 2021 to about $25.8 billion by early 2025. This steady growth suggests an expansion in the operational asset base, indicating increased investment in operating resources or growth of the company's operational activities.

Balance-sheet-based Aggregate Accruals

The balance-sheet-based aggregate accruals display significant fluctuations during the period. Initially, in early 2021, the value is negative at approximately -$2.1 billion, quickly shifting to a positive accrual of around $2.0 billion in 2022. This upward move continues sharply to about $4.5 billion in early 2023, followed by a noticeable decline to approximately $0.5 billion in early 2024 and further decreasing to around $0.18 billion by early 2025. These swings could indicate variability in earnings quality, with potentially higher accruals in 2022 and 2023 suggesting increased non-cash adjustments that diminish substantially in the following years.

Balance-sheet-based Accruals Ratio

The accruals ratio mirrors the behavior of the aggregate accruals but is expressed relative to net operating assets. The ratio moves from a negative -10.9% in 2021 to a positive 10.33% in 2022, reflecting the switch from negative to positive accruals. It then increases significantly to 19.69% in 2023, representing a peak in the proportion of accruals relative to operating assets, signaling potentially higher earnings management or adjustments in that year. Subsequently, there is a sharp decline to 2.06% in 2024 and a further slight reduction to 0.7% in 2025, indicating a marked improvement or normalization in accrual-based adjustments relative to the size of operating assets.

Overall, the data reveals a stable growth in net operating assets accompanied by pronounced volatility in accruals and accrual ratios, especially peaking around 2023 before normalizing in subsequent years. This pattern may reflect changing earnings quality and accrual management practices throughout the period under review.

Net Operating Assets

The net operating assets demonstrate a consistent upward trend over the observed periods. Starting at 18,609 million US dollars in early 2021, the value increased to 25,844 million US dollars by early 2025. This reflects a steady accumulation or expansion of operating assets, with notable increments each year, particularly between 2022 and 2023, and a slower increase thereafter.

Cash-Flow-Statement-Based Aggregate Accruals

The aggregate accruals based on the cash flow statement show considerable volatility throughout the periods. Initially, in 2021, the accruals were significantly negative at -3,566 million US dollars, implying a reduction in accrual components. However, these figures turned positive and peaked in 2023 at 4,266 million US dollars, indicating increased accruals during that period. Subsequent periods show a sharp decline, with values dropping to 277 million US dollars in 2024 and reverting to negative again at -416 million US dollars in 2025. This pattern suggests fluctuations in accrual accounting adjustments and a lack of consistent trend direction.

Cash-Flow-Statement-Based Accruals Ratio

The accruals ratio also exhibits significant variability across the timeline. It began at a negative level of -18.12% in 2021, indicating that accruals were substantially reducing net operating cash flows relative to assets. The ratio reversed sharply to positive figures in 2022 and 2023, reaching a high of 18.64% in 2023, suggesting a period where accruals were increasing operating assets relative to cash flows. This was followed by a sharp decrease to near zero (1.09%) in 2024 and a return to slightly negative territory (-1.62%) in 2025. The fluctuation in this ratio denotes unstable earnings quality related to accruals over the years.