Visa Inc. (NYSE:V)

The analysis of the financial reporting quality measures reveals notable trends in the company's net operating assets and accruals over the examined five-year period.

Net Operating Assets

The net operating assets demonstrate a relatively stable pattern with minor fluctuations. Starting at approximately 36,112 million US dollars in 2018, the value slightly increased to peak at 37,488 million in 2020, before gradually declining to 35,718 million by 2022. This pattern indicates moderate variations without extreme volatility, suggesting a consistent asset base over the years.

Balance-sheet-based Aggregate Accruals

The aggregate accruals exhibit a more volatile trend. Initial figures show a decrease from 560 million US dollars in 2018 to 374 million in 2019, followed by a sharp increase to 1,002 million in 2020. Subsequently, there is a notable reversal with negative accruals recorded in 2021 (-588 million) and a further decline in 2022 (-1,182 million), indicating potential shifts in accrual accounting or operational conditions affecting these values.

Balance-sheet-based Accruals Ratio

The accruals ratio aligns with the movement seen in aggregate accruals but expressed as a percentage relative to net operating assets. The ratio declines from 1.56% in 2018 to 1.03% in 2019, then spikes to 2.71% in 2020, indicating increased accruals relative to assets. Post-2020, there is a significant negative turnaround in the ratio, dropping to -1.58% in 2021 and further to -3.26% in 2022, implying a considerable proportion of negative accruals compared to the asset base.

Overall, the data suggest that while the net operating asset base remains fairly consistent, the accruals and their proportion relative to assets have undergone substantial fluctuations, notably transitioning from positive to negative values in the latter years. Such shifts may reflect changes in earnings quality, accounting policies, or operational challenges impacting accrual-based earnings components during the period analyzed.

Net operating assets

The net operating assets experienced a generally stable trend between 2018 and 2022, fluctuating within a narrow range. Starting at approximately 36,112 million US dollars in 2018, the figure slightly increased to 36,486 million in 2019, then further rose to 37,488 million in 2020, before marginally declining to 36,900 million in 2021 and 35,718 million in 2022. Overall, this reflects minor variability with no significant upward or downward trend, indicating stable asset management over the period.

Cash-flow-statement-based aggregate accruals

The aggregate accruals demonstrated considerable volatility over the five-year span. Beginning with a positive value of 672 million US dollars in 2018, the figure shifted to negative territory in subsequent years with -113 million in 2019 and a pronounced decline to -1,001 million in 2020. This downward trajectory intensified in 2021, reaching -2,764 million, before rebounding substantially to a positive 396 million in 2022. This pattern suggests fluctuating accounting adjustments affecting earnings quality, with a notable improvement in the final year.

Cash-flow-statement-based accruals ratio

The accruals ratio mirrored the trends observed in aggregate accruals, moving from a moderate positive 1.88% in 2018 to a negative range over the following years: -0.31% in 2019, -2.71% in 2020, and -7.43% in 2021. The steep negative value in 2021 implies a significant deviation of accruals from cash flows, potentially signaling lower quality of earnings for that year. However, this measure improved sharply in 2022, returning to a positive 1.09%, indicating a restoration towards a more balanced relationship between accruals and cash flows and possibly enhanced financial reporting quality.