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.
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Intel Corp. pages available for free this week:
- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Income Statement
- Common-Size Balance Sheet: Assets
- Analysis of Short-term (Operating) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value (EV)
- Enterprise Value to FCFF (EV/FCFF)
- Return on Equity (ROE) since 2005
- Price to Operating Profit (P/OP) since 2005
- Price to Book Value (P/BV) since 2005
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Balance-Sheet-Based Accruals Ratio
Intel Corp., balance sheet computation of aggregate accruals
US$ in millions
| Dec 27, 2025 | Dec 28, 2024 | Dec 30, 2023 | Dec 31, 2022 | Dec 25, 2021 | ||
|---|---|---|---|---|---|---|
| Operating Assets | ||||||
| Total assets | ||||||
| Less: Cash and cash equivalents | ||||||
| Less: Short-term investments | ||||||
| Operating assets | ||||||
| Operating Liabilities | ||||||
| Total liabilities | ||||||
| Less: Short-term debt | ||||||
| Less: Long-term debt | ||||||
| Operating liabilities | ||||||
| Net operating assets1 | ||||||
| Balance-sheet-based aggregate accruals2 | ||||||
| Financial Ratio | ||||||
| Balance-sheet-based accruals ratio3 | ||||||
| Benchmarks | ||||||
| Balance-Sheet-Based Accruals Ratio, Competitors4 | ||||||
| Advanced Micro Devices Inc. | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| Texas Instruments Inc. | ||||||
| Balance-Sheet-Based Accruals Ratio, Sector | ||||||
| Semiconductors & Semiconductor Equipment | ||||||
| Balance-Sheet-Based Accruals Ratio, Industry | ||||||
| Information Technology | ||||||
Based on: 10-K (reporting date: 2025-12-27), 10-K (reporting date: 2024-12-28), 10-K (reporting date: 2023-12-30), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25).
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.
The balance-sheet-based accruals ratio exhibited considerable fluctuation over the four-year period. Net operating assets demonstrated a generally increasing trend, while aggregate accruals and the resulting accruals ratio displayed more volatile behavior.
- Net Operating Assets
- Net operating assets increased from US$116,999 million in 2022 to US$134,197 million in 2023, representing a substantial rise. This growth moderated in subsequent years, with a slight decrease to US$132,981 million in 2024, followed by a further increase to US$135,529 million in 2025. The overall trend indicates asset expansion, though with some year-over-year variability.
- Balance-Sheet-Based Aggregate Accruals
- Aggregate accruals increased significantly from US$11,920 million in 2022 to US$17,198 million in 2023. However, a dramatic shift occurred in 2024, with accruals declining to negative US$1,216 million. This negative value suggests a significant reduction in accruals, potentially due to cash generation exceeding reported earnings or a reversal of prior accruals. Accruals then turned positive again in 2025, reaching US$2,548 million.
- Balance-Sheet-Based Accruals Ratio
- The accruals ratio mirrored the trend in aggregate accruals. It rose from 10.73% in 2022 to 13.69% in 2023, indicating a greater proportion of reported earnings derived from accruals rather than cash flow. The ratio experienced a substantial decline in 2024, becoming negative at -0.91%, which is consistent with the negative aggregate accruals. In 2025, the ratio recovered to 1.90%, suggesting a return to a more moderate level of accrual-based earnings. The volatility in this ratio warrants further investigation to understand the underlying drivers of accrual patterns.
The substantial changes in aggregate accruals and the accruals ratio, particularly the negative values observed in 2024, suggest potential shifts in the company’s earnings quality or accounting practices. Further analysis, including a comparison to industry peers and a review of the underlying components of accruals, would be necessary to determine the significance of these fluctuations.
Cash-Flow-Statement-Based Accruals Ratio
Intel Corp., cash flow statement computation of aggregate accruals
US$ in millions
| Dec 27, 2025 | Dec 28, 2024 | Dec 30, 2023 | Dec 31, 2022 | Dec 25, 2021 | ||
|---|---|---|---|---|---|---|
| Net income (loss) attributable to Intel | ||||||
| Less: Net cash provided by operating activities | ||||||
| Less: Net cash used for investing activities | ||||||
| Cash-flow-statement-based aggregate accruals | ||||||
| Financial Ratio | ||||||
| Cash-flow-statement-based accruals ratio1 | ||||||
| Benchmarks | ||||||
| Cash-Flow-Statement-Based Accruals Ratio, Competitors2 | ||||||
| Advanced Micro Devices Inc. | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| Texas Instruments Inc. | ||||||
| Cash-Flow-Statement-Based Accruals Ratio, Sector | ||||||
| Semiconductors & Semiconductor Equipment | ||||||
| Cash-Flow-Statement-Based Accruals Ratio, Industry | ||||||
| Information Technology | ||||||
Based on: 10-K (reporting date: 2025-12-27), 10-K (reporting date: 2024-12-28), 10-K (reporting date: 2023-12-30), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25).
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.
The information presents a fluctuating pattern in aggregate accruals and the corresponding accruals ratio over a four-year period. Net operating assets demonstrate a general upward trend, while accrual-related metrics exhibit significant volatility.
- Net Operating Assets
- Net operating assets increased from US$116,999 million in 2022 to US$134,197 million in 2023, representing substantial growth. This growth moderated in subsequent years, with a slight decrease to US$132,981 million in 2024, followed by a further increase to US$135,529 million in 2025. The overall trend indicates asset expansion, though with some year-over-year variation.
- Cash-Flow-Statement-Based Aggregate Accruals
- Cash-flow-statement-based aggregate accruals were US$3,058 million in 2022. A considerable increase was observed in 2023, reaching US$14,259 million. This was followed by a substantial decrease in 2024, resulting in negative accruals of US$8,788 million. Accruals turned positive again in 2025, amounting to US$4,857 million. This pattern suggests significant swings in non-cash items impacting net income.
- Cash-Flow-Statement-Based Accruals Ratio
- The accruals ratio mirrored the trend in aggregate accruals. It was 2.75% in 2022, increasing sharply to 11.35% in 2023. A significant decline occurred in 2024, with the ratio becoming negative at -6.58%. The ratio recovered to 3.62% in 2025. The volatility in this ratio warrants further investigation, as substantial fluctuations can indicate potential earnings management or changes in accounting practices. A negative accruals ratio suggests that cash flow from operations exceeded reported net income, which could be due to conservative accounting or efficient cash management, but also requires scrutiny.
The large variation in accruals and the accruals ratio, particularly the negative value in 2024, suggests a need for deeper analysis into the underlying components of these accruals. Understanding the drivers behind these fluctuations is crucial for assessing the quality of reported earnings and the sustainability of operational performance.