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

Thermo Fisher Scientific Inc. (NYSE:TMO)

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

Thermo Fisher Scientific Inc., 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 58,381  56,232  56,669  45,908  40,889 
Less: Cash and cash equivalents 2,399  2,103  1,335  786  452 
Operating assets 55,982  54,129  55,334  45,121  40,437 
Operating Liabilities
Total liabilities 28,706  28,646  31,256  24,368  19,539 
Less: Short-term obligations and current maturities of long-term obligations 676  1,271  2,135  1,256  1,053 
Less: Long-term obligations, excluding current maturities 17,076  17,719  18,873  15,372  11,474 
Operating liabilities 10,954  9,656  10,248  7,740  7,012 
 
Net operating assets1 45,028  44,473  45,086  37,381  33,425 
Balance-sheet-based aggregate accruals2 555  (613) 7,705  3,956 
Financial Ratio
Balance-sheet-based accruals ratio3 1.24% -1.37% 18.69% 11.17%
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
Becton, Dickinson & Co. -3.42% 80.26% 0.01% -5.12% 98.81%
Boston Scientific Corp. 40.87% 22.77% 3.43% 2.89%
Danaher Corp. -14.67% 2.50% 5.32% -4.16%
Edwards Lifesciences Corp. 14.93% 4.51% 20.10% 14.42%
Intuitive Surgical Inc. 33.12% 26.86% -15.26% 15.49%
Medtronic PLC 0.51% -7.08% -0.74% 1.04%
Stryker Corp. 8.47% 21.55% 9.67% 42.96%
UnitedHealth Group Inc. 12.14% 13.95% 13.02% 9.15%
Balance-Sheet-Based Accruals Ratio, Sector
Health Care Equipment & Services 5.11% 12.85% 7.38% 5.44%
Balance-Sheet-Based Accruals Ratio, Industry
Health Care 15.82% -0.79% 9.04% 4.69%

Based on: 10-K (filing date: 2020-02-26), 10-K (filing date: 2019-02-27), 10-K (filing date: 2018-02-28), 10-K (filing date: 2017-02-28), 10-K (filing date: 2016-02-25).

1 2019 Calculation
Net operating assets = Operating assets – Operating liabilities
= 55,98210,954 = 45,028

2 2019 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2019 – Net operating assets2018
= 45,02844,473 = 555

3 2019 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × 555 ÷ [(45,028 + 44,473) ÷ 2] = 1.24%

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, Thermo Fisher Scientific Inc. improved earnings quality from 2018 to 2019.

Cash-Flow-Statement-Based Accruals Ratio

Thermo Fisher Scientific Inc., 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 3,696  2,938  2,225  2,022  1,975 
Less: Net cash provided by operating activities 4,973  4,543  4,006  3,158  2,826 
Less: Net cash used in investing activities (1,487) (1,253) (7,729) (5,532) (1,087)
Cash-flow-statement-based aggregate accruals 210  (352) 5,948  4,396  237 
Financial Ratio
Cash-flow-statement-based accruals ratio1 0.47% -0.79% 14.43% 12.42%
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
Becton, Dickinson & Co. -3.34% 45.11% -3.22% -5.06% 58.68%
Boston Scientific Corp. 40.22% 23.38% -2.55% 2.21%
Danaher Corp. 1.49% 4.30% -0.40% 13.21%
Edwards Lifesciences Corp. 15.43% -10.36% 9.54% 3.79%
Intuitive Surgical Inc. 21.54% 31.54% -28.80% 32.51%
Medtronic PLC -2.45% -10.98% -1.82% -5.58%
Stryker Corp. 7.21% 23.53% 7.81% 37.39%
UnitedHealth Group Inc. 9.67% 11.81% 8.68% 11.49%
Cash-Flow-Statement-Based Accruals Ratio, Sector
Health Care Equipment & Services 5.24% 8.17% 3.71% 6.61%
Cash-Flow-Statement-Based Accruals Ratio, Industry
Health Care 3.88% -5.94% 1.03% 5.97%

Based on: 10-K (filing date: 2020-02-26), 10-K (filing date: 2019-02-27), 10-K (filing date: 2018-02-28), 10-K (filing date: 2017-02-28), 10-K (filing date: 2016-02-25).

1 2019 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × 210 ÷ [(45,028 + 44,473) ÷ 2] = 0.47%

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, Thermo Fisher Scientific Inc. improved earnings quality from 2018 to 2019.