Stock Analysis on Net
Stock Analysis on Net

Walmart Inc. (NYSE:WMT)

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Financial Reporting Quality: Aggregate Accruals

Microsoft Excel

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.

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Balance-Sheet-Based Accruals Ratio

Walmart Inc., balance sheet computation of aggregate accruals

US$ in millions

Microsoft Excel
Jan 31, 2025 Jan 31, 2024 Jan 31, 2023 Jan 31, 2022 Jan 31, 2021 Jan 31, 2020
Operating Assets
Total assets
Less: Cash and cash equivalents
Operating assets
Operating Liabilities
Total liabilities
Less: Short-term borrowings
Less: Long-term debt due within one year
Less: Finance lease obligations due within one year
Less: Long-term debt, excluding due within one year
Less: Long-term finance lease obligations, excluding due within one year
Operating liabilities
 
Net operating assets1
Balance-sheet-based aggregate accruals2
Financial Ratio
Balance-sheet-based accruals ratio3
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
Costco Wholesale Corp.
Target Corp.
Balance-Sheet-Based Accruals Ratio, Sector
Consumer Staples Distribution & Retail
Balance-Sheet-Based Accruals Ratio, Industry
Consumer Staples

Based on: 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-01-31), 10-K (reporting date: 2023-01-31), 10-K (reporting date: 2022-01-31), 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-01-31).

1 2025 Calculation
Net operating assets = Operating assets – Operating liabilities
= – =

2 2025 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2025 – Net operating assets2024
= – =

3 2025 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × ÷ [( + ) ÷ 2] =

4 Click competitor name to see calculations.

Net Operating Assets
The net operating assets exhibited a consistent upward trend over the analyzed timeframe. Specifically, the value increased from 118,661 million US dollars in 2021 to 134,445 million US dollars in 2025. This gradual growth suggests an expansion in the company’s operating asset base, with the most notable annual increment occurring between 2023 and 2024.
Balance-sheet-based Aggregate Accruals
The balance-sheet-based aggregate accruals displayed significant volatility during the period under review. Starting at a negative figure of -7,895 million US dollars in 2021, the accruals switched to positive territory in 2022 at 1,301 million US dollars and remained relatively low in 2023 at 26 million US dollars. However, a substantial increase was noted in 2024, reaching 7,607 million US dollars, followed by a slight decrease to 6,850 million US dollars in 2025. This pattern indicates fluctuations in the timing and recognition of revenues and expenses, with a pronounced increase in accruals in the latter years.
Balance-sheet-based Accruals Ratio
The accruals ratio, expressed as a percentage of net operating assets, mirrored the behavior of aggregate accruals but within a narrower scale. Starting from a negative 6.44% in 2021, it rose to a marginal 0.02% by 2023, indicating stabilization after an initial recovery in 2022 at 1.09%. A marked increase occurred in 2024 to 6.15%, followed by a slight decline to 5.23% in 2025. This upward trajectory implies increased accruals relative to net operating assets, which may reflect changes in accounting practices or operational factors impacting earnings quality.
Overall Insights
The data reveals a steady increase in net operating assets, accompanied by pronounced fluctuations in accruals levels and ratios. The shift from negative to positive accruals and a rising accruals ratio suggest variations in earnings recognition timing, potentially impacting the quality of reported earnings. The notable rise in accruals from 2023 onwards warrants closer examination to understand underlying causes and implications for financial reporting quality.

Cash-Flow-Statement-Based Accruals Ratio

Walmart Inc., cash flow statement computation of aggregate accruals

US$ in millions

Microsoft Excel
Jan 31, 2025 Jan 31, 2024 Jan 31, 2023 Jan 31, 2022 Jan 31, 2021 Jan 31, 2020
Consolidated net income attributable to Walmart
Less: Net cash provided by operating activities
Less: Net cash used in investing activities
Cash-flow-statement-based aggregate accruals
Financial Ratio
Cash-flow-statement-based accruals ratio1
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
Costco Wholesale Corp.
Target Corp.
Cash-Flow-Statement-Based Accruals Ratio, Sector
Consumer Staples Distribution & Retail
Cash-Flow-Statement-Based Accruals Ratio, Industry
Consumer Staples

Based on: 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-01-31), 10-K (reporting date: 2023-01-31), 10-K (reporting date: 2022-01-31), 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-01-31).

1 2025 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × ÷ [( + ) ÷ 2] =

2 Click competitor name to see calculations.

Net Operating Assets
The net operating assets demonstrated a consistent upward trend over the periods analyzed. Starting at approximately 118,661 million USD in early 2021, the figure gradually increased to 134,445 million USD by early 2025. This steady growth suggests an expansion in the company's operational asset base over the five-year span.
Cash-flow-statement-based Aggregate Accruals
This measure showed a significant shift in values across the periods. Initially, the aggregate accruals were negative, with a value of -12,493 million USD in 2021, indicating possible conservative earnings management or timing differences between cash flows and earnings. The magnitude of negative accruals lessened substantially in 2022 to -4,493 million USD, then transitioned to positive values in subsequent years, reaching 4,372 million USD by 2025. This change from negative to positive accruals could reflect alterations in accounting policies, changes in operations, or shifts in earnings quality.
Cash-flow-statement-based Accruals Ratio
The accruals ratio followed a similar pattern to aggregate accruals, starting at -10.19% in 2021 and moving closer to zero in 2022 at -3.77%. From 2023 onward, the ratio turned positive, albeit modestly at first (0.47% in 2023 and 0.87% in 2024), then increased to 3.34% in 2025. This progression indicates a reduction in reliance on accruals relative to operating cash flows in earlier years, shifting toward a higher proportion of accruals in later years. The increasing ratio in recent periods may warrant further monitoring, as rising accruals can be associated with increased risk in earnings quality.