Stock Analysis on Net

Kraft Heinz Co. (NASDAQ:KHC)

This company has been moved to the archive! The financial data has not been updated since July 31, 2020.

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.


Balance-Sheet-Based Accruals Ratio

Kraft Heinz Co., balance sheet computation of aggregate accruals

US$ in millions

Microsoft Excel
Dec 28, 2019 Dec 29, 2018 Dec 30, 2017 Dec 31, 2016 Dec 31, 2015
Operating Assets
Total assets 101,450 103,461 120,232 120,480 122,973
Less: Cash and cash equivalents 2,279 1,130 1,629 4,204 4,837
Operating assets 99,171 102,331 118,603 116,276 118,136
Operating Liabilities
Total liabilities 49,701 51,683 53,985 62,906 56,737
Less: Commercial paper and other short-term debt 6 21 460 645 4
Less: Current portion of long-term debt 1,022 377 2,743 2,046 79
Less: Long-term debt, excluding current portion 28,216 30,770 28,333 29,713 25,151
Operating liabilities 20,457 20,515 22,449 30,502 31,503
 
Net operating assets1 78,714 81,816 96,154 85,774 86,633
Balance-sheet-based aggregate accruals2 (3,102) (14,338) 10,380 (859)
Financial Ratio
Balance-sheet-based accruals ratio3 -3.86% -16.11% 11.41% -1.00%
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
Altria Group Inc.
Coca-Cola Co.
PepsiCo Inc.
Philip Morris International Inc.
Balance-Sheet-Based Accruals Ratio, Sector
Food, Beverage & Tobacco 200.00%
Balance-Sheet-Based Accruals Ratio, Industry
Consumer Staples 200.00%

Based on: 10-K (reporting date: 2019-12-28), 10-K (reporting date: 2018-12-29), 10-K (reporting date: 2017-12-30), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

1 2019 Calculation
Net operating assets = Operating assets – Operating liabilities
= 99,17120,457 = 78,714

2 2019 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2019 – Net operating assets2018
= 78,71481,816 = -3,102

3 2019 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × -3,102 ÷ [(78,714 + 81,816) ÷ 2] = -3.86%

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, Kraft Heinz Co. improved earnings quality from 2018 to 2019.

Cash-Flow-Statement-Based Accruals Ratio

Kraft Heinz Co., cash flow statement computation of aggregate accruals

US$ in millions

Microsoft Excel
Dec 28, 2019 Dec 29, 2018 Dec 30, 2017 Dec 31, 2016 Dec 31, 2015
Net income (loss) attributable to Kraft Heinz 1,935 (10,192) 10,999 3,632 634
Less: Net cash provided by operating activities 3,552 2,574 527 5,238 2,467
Less: Net cash (used for) provided by investing activities 1,511 288 1,156 (1,113) (9,704)
Cash-flow-statement-based aggregate accruals (3,128) (13,054) 9,316 (493) 7,871
Financial Ratio
Cash-flow-statement-based accruals ratio1 -3.90% -14.67% 10.24% -0.57%
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
Altria Group Inc.
Coca-Cola Co.
PepsiCo Inc.
Philip Morris International Inc.
Cash-Flow-Statement-Based Accruals Ratio, Sector
Food, Beverage & Tobacco -1.85%
Cash-Flow-Statement-Based Accruals Ratio, Industry
Consumer Staples -2.87%

Based on: 10-K (reporting date: 2019-12-28), 10-K (reporting date: 2018-12-29), 10-K (reporting date: 2017-12-30), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

1 2019 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × -3,128 ÷ [(78,714 + 81,816) ÷ 2] = -3.90%

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, Kraft Heinz Co. improved earnings quality from 2018 to 2019.