Microsoft Excel LibreOffice Calc

Walt Disney Co. (DIS)


Financial Reporting Quality: Aggregate Accruals

Advanced level

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

Walt Disney Co., balance sheet computation of aggregate accruals

US$ in millions

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Sep 28, 2019 Sep 29, 2018 Sep 30, 2017 Oct 1, 2016 Oct 3, 2015 Sep 27, 2014
Operating Assets
Total assets 193,984  98,598  95,789  92,033  88,182  84,186 
Less: Cash and cash equivalents 5,418  4,150  4,017  4,610  4,269  3,421 
Operating assets 188,566  94,448  91,772  87,423  83,913  80,765 
Operating Liabilities
Total liabilities 91,132  44,643  49,637  44,710  39,527  36,008 
Less: Current portion of borrowings 8,857  3,790  6,172  3,687  4,563  2,164 
Less: Borrowings, excluding current portion 38,129  17,084  19,119  16,483  12,773  12,676 
Operating liabilities 44,146  23,769  24,346  24,540  22,191  21,168 
Net operating assets1 144,420  70,679  67,426  62,883  61,722  59,597 
Balance-sheet-based aggregate accruals2 73,741  3,253  4,543  1,161  2,125 
Ratio
Balance-sheet-based accruals ratio3 68.56% 4.71% 6.97% 1.86% 3.50%
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
Charter Communications Inc. -0.51% 5.76% 102.44% 51.04%
Comcast Corp. 31.76% 13.40% 8.91% 6.93%
Balance-Sheet-Based Accruals Ratio, Sector
Media 0.00% 15.31% 9.14% 34.94% 12.40%
Balance-Sheet-Based Accruals Ratio, Industry
Consumer Services 0.00% 15.50% 7.81% 15.63% 7.23%

Based on: 10-K (filing date: 2019-11-20), 10-K (filing date: 2018-11-21), 10-K (filing date: 2017-11-22), 10-K (filing date: 2016-11-23), 10-K (filing date: 2015-11-25), 10-K (filing date: 2014-11-19).

1 2019 Calculation
Net operating assets = Operating assets – Operating liabilities
= 188,56644,146 = 144,420

2 2019 Calculation
Balance-sheet-based aggregate accruals = Net operating assets 2019 – Net operating assets 2018
= 144,42070,679 = 73,741

3 2019 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × 73,741 ÷ [(144,420 + 70,679) ÷ 2] = 68.56%

4 Click competitor name to see calculations.

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, Walt Disney Co. deteriorated earnings quality from 2018 to 2019.

Cash-Flow-Statement-Based Accruals Ratio

Walt Disney Co., cash flow statement computation of aggregate accruals

US$ in millions

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Sep 28, 2019 Sep 29, 2018 Sep 30, 2017 Oct 1, 2016 Oct 3, 2015 Sep 27, 2014
Net income attributable to The Walt Disney Company (Disney) 11,054  12,598  8,980  9,391  8,382  7,501 
Less: Cash provided by operations 5,984  14,295  12,343  13,213  10,909  9,780 
Less: Cash used in investing activities (15,096) (5,336) (4,111) (5,758) (4,245) (3,345)
Cash-flow-statement-based aggregate accruals 20,166  3,639  748  1,936  1,718  1,066 
Ratio
Cash-flow-statement-based accruals ratio1 18.75% 5.27% 1.15% 3.11% 2.83%
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
Charter Communications Inc. -0.69% 5.30% 9.26% 50.68%
Comcast Corp. 24.41% 12.14% 7.10% 1.32%
Cash-Flow-Statement-Based Accruals Ratio, Sector
Media 0.00% 12.00% 7.20% 6.73% 9.14%
Cash-Flow-Statement-Based Accruals Ratio, Industry
Consumer Services 0.00% 6.48% 3.97% 2.74% 3.79%

Based on: 10-K (filing date: 2019-11-20), 10-K (filing date: 2018-11-21), 10-K (filing date: 2017-11-22), 10-K (filing date: 2016-11-23), 10-K (filing date: 2015-11-25), 10-K (filing date: 2014-11-19).

1 2019 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × 20,166 ÷ [(144,420 + 70,679) ÷ 2] = 18.75%

2 Click competitor name to see calculations.

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, Walt Disney Co. deteriorated earnings quality from 2018 to 2019.