Stock Analysis on Net

Thermo Fisher Scientific Inc. (NYSE:TMO)

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

Thermo Fisher Scientific Inc., balance sheet computation of aggregate accruals

US$ in millions

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Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Operating Assets
Total assets 98,726 97,154 95,123 69,052 58,381
Less: Cash and cash equivalents 8,077 8,524 4,477 10,325 2,399
Operating assets 90,649 88,630 90,646 58,727 55,982
Operating Liabilities
Total liabilities 51,884 53,006 54,146 34,535 28,706
Less: Short-term obligations and current maturities of long-term obligations 3,609 5,579 2,537 2,628 676
Less: Long-term obligations, excluding current maturities 31,308 28,909 32,333 19,107 17,076
Operating liabilities 16,967 18,518 19,276 12,800 10,954
 
Net operating assets1 73,682 70,112 71,370 45,927 45,028
Balance-sheet-based aggregate accruals2 3,570 (1,258) 25,443 899
Financial Ratio
Balance-sheet-based accruals ratio3 4.97% -1.78% 43.38% 1.98%
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
AbbVie Inc. -22.39% -14.27% -9.69% 131.82%
Amgen Inc. 57.08% 4.07% 0.70% 3.47%
Bristol-Myers Squibb Co. -7.12% -3.86% -13.40% -13.24%
Eli Lilly & Co. 28.84% 11.38% 16.60% 18.42%
Gilead Sciences Inc. 1.04% -2.92% -2.34% 59.36%
Johnson & Johnson -21.13% 19.84% 3.75% 7.76%
Merck & Co. Inc. 3.16% 0.46% 25.14% 15.90%
Pfizer Inc. 30.66% 24.95% -7.11% -14.91%
Regeneron Pharmaceuticals Inc. 1.17% 11.07% 43.54% 16.50%
Vertex Pharmaceuticals Inc. 61.24% 14.07% 18.20% -8.97%
Balance-Sheet-Based Accruals Ratio, Sector
Pharmaceuticals, Biotechnology & Life Sciences 7.77% 5.56% 5.06% 17.61%
Balance-Sheet-Based Accruals Ratio, Industry
Health Care 8.00% 2.36% 5.50% 10.57%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

1 2023 Calculation
Net operating assets = Operating assets – Operating liabilities
= 90,64916,967 = 73,682

2 2023 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2023 – Net operating assets2022
= 73,68270,112 = 3,570

3 2023 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × 3,570 ÷ [(73,682 + 70,112) ÷ 2] = 4.97%

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. deteriorated earnings quality from 2022 to 2023.

Cash-Flow-Statement-Based Accruals Ratio

Thermo Fisher Scientific Inc., cash flow statement computation of aggregate accruals

US$ in millions

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Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Net income attributable to Thermo Fisher Scientific Inc. 5,995 6,950 7,725 6,375 3,696
Less: Net cash provided by operating activities 8,406 9,154 9,312 8,289 4,973
Less: Net cash used in investing activities (5,142) (2,159) (21,932) (1,510) (1,487)
Cash-flow-statement-based aggregate accruals 2,731 (45) 20,345 (404) 210
Financial Ratio
Cash-flow-statement-based accruals ratio1 3.80% -0.06% 34.69% -0.89%
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
AbbVie Inc. -24.89% -16.25% -10.28% 44.98%
Amgen Inc. 52.47% 8.81% -12.87% 6.95%
Bristol-Myers Squibb Co. -5.99% -9.10% -12.73% -15.67%
Eli Lilly & Co. 28.13% 10.32% 5.30% 11.38%
Gilead Sciences Inc. -0.19% -4.95% -4.86% 20.18%
Johnson & Johnson 13.66% 10.78% 8.23% 17.00%
Merck & Co. Inc. 2.23% 0.61% 29.09% 13.75%
Pfizer Inc. 19.96% 18.46% 13.18% 3.27%
Regeneron Pharmaceuticals Inc. 14.35% 18.61% 49.24% 10.32%
Vertex Pharmaceuticals Inc. 62.03% -14.45% 1.38% -23.47%
Cash-Flow-Statement-Based Accruals Ratio, Sector
Pharmaceuticals, Biotechnology & Life Sciences 9.84% 2.64% 7.05% 9.16%
Cash-Flow-Statement-Based Accruals Ratio, Industry
Health Care 8.56% 2.29% 6.44% 6.57%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

1 2023 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × 2,731 ÷ [(73,682 + 70,112) ÷ 2] = 3.80%

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. deteriorated earnings quality from 2022 to 2023.