Financial Reporting Quality: Aggregate Accruals
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
Uber Technologies Inc., balance sheet computation of aggregate accruals
US$ in millions
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Operating Assets | ||||||
| Total assets | 51,244) | 38,699) | 32,109) | 38,774) | 33,252) | |
| Less: Cash and cash equivalents | 5,893) | 4,680) | 4,208) | 4,295) | 5,647) | |
| Less: Short-term investments | 1,084) | 727) | 103) | —) | 1,180) | |
| Less: Restricted cash and cash equivalents | 545) | 805) | 680) | 631) | 250) | |
| Operating assets | 43,722) | 32,487) | 27,118) | 33,848) | 26,175) | |
| Operating Liabilities | ||||||
| Total liabilities | 28,768) | 26,017) | 23,605) | 23,425) | 19,498) | |
| Less: Current portion of long-term debt | 1,150) | 25) | 27) | 27) | 27) | |
| Less: Finance leases liabilities, current | 136) | 156) | 115) | 191) | 177) | |
| Less: Long-term debt, net of current portion | 8,347) | 9,459) | 9,265) | 9,276) | 7,560) | |
| Less: Finance leases liabilities, non-current | 174) | 322) | 284) | 43) | 120) | |
| Operating liabilities | 18,961) | 16,055) | 13,914) | 13,888) | 11,614) | |
| Net operating assets1 | 24,761) | 16,432) | 13,204) | 19,960) | 14,561) | |
| Balance-sheet-based aggregate accruals2 | 8,329) | 3,228) | (6,756) | 5,399) | —) | |
| Financial Ratio | ||||||
| Balance-sheet-based accruals ratio3 | 40.44% | 21.78% | -40.74% | 31.28% | — | |
| Benchmarks | ||||||
| Balance-Sheet-Based Accruals Ratio, Competitors4 | ||||||
| FedEx Corp. | 3.63% | 3.85% | 0.91% | 6.93% | 7.01% | |
| Union Pacific Corp. | 1.61% | 3.95% | 3.63% | 2.46% | — | |
| United Airlines Holdings Inc. | 0.97% | 15.54% | 3.50% | -2.74% | — | |
| United Parcel Service Inc. | -5.51% | 5.00% | 21.85% | 29.53% | — | |
| Balance-Sheet-Based Accruals Ratio, Sector | ||||||
| Transportation | 5.40% | 7.66% | 1.50% | 10.61% | — | |
| Balance-Sheet-Based Accruals Ratio, Industry | ||||||
| Industrials | 4.97% | -1.04% | 0.29% | 3.43% | — | |
Based on: 10-K (reporting date: 2024-12-31), 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).
1 2024 Calculation
Net operating assets = Operating assets – Operating liabilities
= 43,722 – 18,961 = 24,761
2 2024 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2024 – Net operating assets2023
= 24,761 – 16,432 = 8,329
3 2024 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × 8,329 ÷ [(24,761 + 16,432) ÷ 2] = 40.44%
4 Click competitor name to see calculations.
The analysis of the financial reporting quality data over the four-year period reveals notable fluctuations in key financial metrics related to operating assets and accruals.
- Net operating assets
- The net operating assets exhibit a decreasing trend from 19,960 million US$ in 2021 to 13,204 million US$ in 2022, representing a significant reduction. However, there is a reversal in this pattern as the value increases to 16,432 million US$ in 2023 and further rises sharply to 24,761 million US$ in 2024. This indicates a recovery and expansion phase in net operating assets after the initial decline.
- Balance-sheet-based aggregate accruals
- This metric shows substantial volatility over the period. Beginning at 5,399 million US$ in 2021, it shifts dramatically to a negative figure of -6,756 million US$ in 2022, signaling a major reversal in accruals. Thereafter, the value returns to positive territory in 2023 at 3,228 million US$ and increases again to 8,329 million US$ in 2024. Such swings suggest considerable changes in accrual accounting adjustments or working capital components across these years.
- Balance-sheet-based accruals ratio
- The ratio reflects the relative size of accruals compared to net operating assets and follows a pattern consistent with aggregate accruals. It reaches a peak of 31.28% in 2021 before dropping sharply to -40.74% in 2022. Subsequently, it rises significantly to 21.78% in 2023 and continues to climb to 40.44% in 2024. The negative value in 2022 is particularly notable, indicating a substantial negative accrual effect relative to net operating assets, which then reverts to strong positive levels.
Overall, the data highlights a period of instability in accrual measures around 2022, accompanied by notable recoveries in subsequent years. The increasing net operating assets and upward trend in the accruals ratio from 2023 onward may imply improving operating efficiency or changes in accounting policies that affect accumulated accrual balances. These fluctuations warrant close monitoring as they could impact the assessment of earnings quality and financial statement reliability.
Cash-Flow-Statement-Based Accruals Ratio
Uber Technologies Inc., cash flow statement computation of aggregate accruals
US$ in millions
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Net income (loss) attributable to Uber Technologies, Inc. | 9,856) | 1,887) | (9,141) | (496) | (6,768) | |
| Less: Net cash provided by (used in) operating activities | 7,137) | 3,585) | 642) | (445) | (2,745) | |
| Less: Net cash used in investing activities | (3,177) | (3,226) | (1,637) | (1,201) | (2,869) | |
| Cash-flow-statement-based aggregate accruals | 5,896) | 1,528) | (8,146) | 1,150) | (1,154) | |
| Financial Ratio | ||||||
| Cash-flow-statement-based accruals ratio1 | 28.63% | 10.31% | -49.13% | 6.66% | — | |
| Benchmarks | ||||||
| Cash-Flow-Statement-Based Accruals Ratio, Competitors2 | ||||||
| FedEx Corp. | 3.01% | 3.32% | 2.12% | 3.01% | 5.95% | |
| Union Pacific Corp. | 1.55% | 3.67% | 2.53% | 0.47% | — | |
| United Airlines Holdings Inc. | -13.64% | 7.35% | 38.00% | -10.59% | — | |
| United Parcel Service Inc. | -12.64% | 11.02% | 17.11% | 7.63% | — | |
| Cash-Flow-Statement-Based Accruals Ratio, Sector | ||||||
| Transportation | 0.04% | 6.33% | 4.81% | 1.28% | — | |
| Cash-Flow-Statement-Based Accruals Ratio, Industry | ||||||
| Industrials | 5.29% | 1.67% | -2.31% | -8.91% | — | |
Based on: 10-K (reporting date: 2024-12-31), 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).
1 2024 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × 5,896 ÷ [(24,761 + 16,432) ÷ 2] = 28.63%
2 Click competitor name to see calculations.
- Net Operating Assets
- There is a fluctuating trend in net operating assets over the analyzed period. The value decreased significantly from 19,960 million US dollars at the end of 2021 to 13,204 million US dollars by the end of 2022. This was followed by a moderate recovery to 16,432 million US dollars at the end of 2023, and then a substantial increase reaching 24,761 million US dollars by the end of 2024. The overall change indicates variability with a strong upward movement in the last recorded period.
- Cash-flow-statement-based Aggregate Accruals
- The aggregate accruals show a pronounced volatility throughout the reported years. Starting with a positive figure of 1,150 million US dollars in 2021, there is a dramatic shift to a large negative value of -8,146 million US dollars in 2022. The figure then rebounds to positive 1,528 million US dollars in 2023 and rises further to 5,896 million US dollars in 2024. This suggests a period of significant accrual adjustments negatively impacting 2022, followed by recovery and growth in subsequent years.
- Cash-flow-statement-based Accruals Ratio
- The accruals ratio displays a pattern consistent with aggregate accruals, reflecting the degree of accruals relative to cash flow. Initially, the ratio was positive at 6.66% in 2021, dropped sharply to a negative -49.13% in 2022, signaling possible deteriorations in earnings quality or cash flow issues. It recovered to 10.31% in 2023 and further increased to 28.63% by 2024. The positive trend in the last two years suggests improving accrual quality and potentially stronger cash flow management.