Stock Analysis on Net

Linde plc (NASDAQ:LIN)

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

Linde plc, balance sheet computation of aggregate accruals

US$ in millions

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Operating Assets
Total assets 80,811 79,658 81,605 88,229 86,612
Less: Cash and cash equivalents 4,664 5,436 2,823 3,754 2,700
Operating assets 76,147 74,222 78,782 84,475 83,912
Operating Liabilities
Total liabilities 39,716 38,271 36,164 38,647 34,977
Less: Short-term debt 4,713 4,117 1,163 3,251 1,732
Less: Current portion of long-term debt 1,263 1,599 1,709 751 1,531
Less: Current finance lease liabilities 50 42 47 38
Less: Long-term debt, excluding current portion 13,397 12,198 11,335 12,152 10,693
Less: Long-term finance lease liabilities 143 114 129 125
Operating liabilities 20,150 20,201 21,781 22,330 21,021
 
Net operating assets1 55,997 54,021 57,001 62,145 62,891
Balance-sheet-based aggregate accruals2 1,976 (2,980) (5,144) (746)
Financial Ratio
Balance-sheet-based accruals ratio3 3.59% -5.37% -8.63% -1.19%
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
Sherwin-Williams Co. -1.37% 12.51% 1.78% -7.98%
Balance-Sheet-Based Accruals Ratio, Sector
Chemicals 2.62% -2.04% -6.91% -2.30%
Balance-Sheet-Based Accruals Ratio, Industry
Materials 5.47% 1.53% -5.48% -2.26%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

1 2023 Calculation
Net operating assets = Operating assets – Operating liabilities
= 76,14720,150 = 55,997

2 2023 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2023 – Net operating assets2022
= 55,99754,021 = 1,976

3 2023 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × 1,976 ÷ [(55,997 + 54,021) ÷ 2] = 3.59%

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, Linde plc improved earnings quality from 2022 to 2023.

Cash-Flow-Statement-Based Accruals Ratio

Linde plc, cash flow statement computation of aggregate accruals

US$ in millions

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Net income, Linde plc 6,199 4,147 3,826 2,501 2,285
Less: Net cash provided by operating activities 9,305 8,864 9,725 7,429 6,119
Less: Net cash (used for) provided by investing activities (4,670) (3,088) (3,007) (2,986) 1,189
Cash-flow-statement-based aggregate accruals 1,564 (1,629) (2,892) (1,942) (5,023)
Financial Ratio
Cash-flow-statement-based accruals ratio1 2.84% -2.93% -4.85% -3.11%
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
Sherwin-Williams Co. -0.70% 13.47% 0.82% -8.68%
Cash-Flow-Statement-Based Accruals Ratio, Sector
Chemicals 2.15% 0.12% -3.92% -4.01%
Cash-Flow-Statement-Based Accruals Ratio, Industry
Materials 3.08% 1.97% -4.42% -4.17%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

1 2023 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × 1,564 ÷ [(55,997 + 54,021) ÷ 2] = 2.84%

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, Linde plc improved earnings quality from 2022 to 2023.