Stock Analysis on Net

Visa Inc. (NYSE:V)

Financial Reporting Quality: Aggregate Accruals 

Microsoft Excel LibreOffice Calc

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

Visa Inc., balance sheet computation of aggregate accruals

US$ in millions

Microsoft Excel LibreOffice Calc
Sep 30, 2021 Sep 30, 2020 Sep 30, 2019 Sep 30, 2018 Sep 30, 2017 Sep 30, 2016
Operating Assets
Total assets 82,896  80,919  72,574  69,225  67,977  64,035 
Less: Cash and cash equivalents 16,487  16,289  7,838  8,162  9,874  5,619 
Less: Restricted cash equivalents, U.S. litigation escrow 894  901  1,205  1,491  1,031  1,027 
Less: Investment securities 2,025  3,752  4,236  3,547  3,564  3,319 
Less: Customer collateral 2,260  1,850  1,648  1,324  1,106  1,001 
Operating assets 61,230  58,127  57,647  54,701  52,402  53,069 
Operating Liabilities
Total liabilities 45,307  44,709  37,890  35,219  35,217  31,123 
Less: Current maturities of debt 999  2,999  —  —  1,749  — 
Less: Long-term debt, excluding current maturities 19,978  21,071  16,729  16,630  16,618  15,882 
Operating liabilities 24,330  20,639  21,161  18,589  16,850  15,241 
 
Net operating assets1 36,900  37,488  36,486  36,112  35,552  37,828 
Balance-sheet-based aggregate accruals2 (588) 1,002  374  560  (2,276) — 
Financial Ratio
Balance-sheet-based accruals ratio3 -1.58% 2.71% 1.03% 1.56% -6.20%
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
Accenture PLC 27.93% 3.73% 42.14% 1.41% 51.55%
Adobe Inc. 14.14% 8.20% 2.25% 77.63% -0.97%
Automatic Data Processing Inc.
International Business Machines Corp. -7.39% -9.64% 38.84% -2.32%
Intuit Inc. 139.73% -1.39% 29.27% 1.03% -1.49%
Mastercard Inc. 53.84% 25.41% 91.82% 13.74%
Microsoft Corp. 40.52% 14.41% 46.31% 4.67% 72.10%
Oracle Corp. 5.62% 1.35% 2.79% -15.16%
PayPal Holdings Inc.
Salesforce Inc. 10.87% 65.87% 71.99% -11.13%
ServiceNow Inc. 34.89% 19.95% 121.81% 234.32%
Balance-Sheet-Based Accruals Ratio, Sector
Software & Services 16.26% 7.51% 33.82% -3.25% 200.00%
Balance-Sheet-Based Accruals Ratio, Industry
Information Technology 21.30% 2.65% 5.75% -3.22% 200.00%

Based on: 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30).

1 2021 Calculation
Net operating assets = Operating assets – Operating liabilities
= 61,23024,330 = 36,900

2 2021 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2021 – Net operating assets2020
= 36,90037,488 = -588

3 2021 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × -588 ÷ [(36,900 + 37,488) ÷ 2] = -1.58%

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, Visa Inc. improved earnings quality from 2020 to 2021.

Cash-Flow-Statement-Based Accruals Ratio

Visa Inc., cash flow statement computation of aggregate accruals

US$ in millions

Microsoft Excel LibreOffice Calc
Sep 30, 2021 Sep 30, 2020 Sep 30, 2019 Sep 30, 2018 Sep 30, 2017 Sep 30, 2016
Net income 12,311  10,866  12,080  10,301  6,699  5,991 
Less: Net cash provided by operating activities 15,227  10,440  12,784  12,713  9,208  5,574 
Less: Net cash (used in) provided by investing activities (152) 1,427  (591) (3,084) 735  (10,916)
Cash-flow-statement-based aggregate accruals (2,764) (1,001) (113) 672  (3,244) 11,333 
Financial Ratio
Cash-flow-statement-based accruals ratio1 -7.43% -2.71% -0.31% 1.88% -8.84%
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
Accenture PLC 11.80% -13.65% -1.28% -12.70% 15.84%
Adobe Inc. 9.21% -0.48% -9.78% 43.94% -17.08%
Automatic Data Processing Inc.
International Business Machines Corp. -1.64% -13.41% 34.45% -3.14%
Intuit Inc. 58.72% -34.22% -15.95% -34.47% -50.61%
Mastercard Inc. 52.06% 19.04% 47.01% 8.38%
Microsoft Corp. 17.68% -8.19% 7.37% -73.75% 137.66%
Oracle Corp. 25.81% -31.35% -74.80% -13.86%
PayPal Holdings Inc.
Salesforce Inc. 10.57% -5.62% 28.07% -8.23%
ServiceNow Inc. -21.14% -12.82% 16.38% -387.26%
Cash-Flow-Statement-Based Accruals Ratio, Sector
Software & Services 15.79% -8.82% 1.78% -19.91% 48.88%
Cash-Flow-Statement-Based Accruals Ratio, Industry
Information Technology 12.03% -6.35% -10.84% -17.98% 23.05%

Based on: 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30).

1 2021 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × -2,764 ÷ [(36,900 + 37,488) ÷ 2] = -7.43%

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, Visa Inc. deteriorated earnings quality from 2020 to 2021.