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.
Balance-Sheet-Based Accruals Ratio
Starbucks Corp., balance sheet computation of aggregate accruals
US$ in thousands
| Sep 28, 2025 | Sep 29, 2024 | Oct 1, 2023 | Oct 2, 2022 | Oct 3, 2021 | Sep 27, 2020 | ||
|---|---|---|---|---|---|---|---|
| Operating Assets | |||||||
| Total assets | 32,019,700) | 31,339,300) | 29,445,500) | 27,978,400) | 31,392,600) | 29,374,500) | |
| Less: Cash and cash equivalents | 3,219,800) | 3,286,200) | 3,551,500) | 2,818,400) | 6,455,700) | 4,350,900) | |
| Less: Short-term investments | 247,200) | 257,000) | 401,500) | 364,500) | 162,200) | 281,200) | |
| Operating assets | 28,552,700) | 27,796,100) | 25,492,500) | 24,795,500) | 24,774,700) | 24,742,400) | |
| Operating Liabilities | |||||||
| Total liabilities | 40,108,900) | 38,780,900) | 37,433,300) | 36,677,100) | 36,707,100) | 37,173,900) | |
| Less: Current portion of long-term debt | 1,498,900) | 1,248,900) | 1,818,600) | 1,749,000) | 998,900) | 1,249,900) | |
| Less: Long-term debt, excluding current portion | 14,575,900) | 14,319,500) | 13,547,600) | 13,119,900) | 13,616,900) | 14,659,600) | |
| Operating liabilities | 24,034,100) | 23,212,500) | 22,067,100) | 21,808,200) | 22,091,300) | 21,264,400) | |
| Net operating assets1 | 4,518,600) | 4,583,600) | 3,425,400) | 2,987,300) | 2,683,400) | 3,478,000) | |
| Balance-sheet-based aggregate accruals2 | (65,000) | 1,158,200) | 438,100) | 303,900) | (794,600) | —) | |
| Financial Ratio | |||||||
| Balance-sheet-based accruals ratio3 | -1.43% | 28.92% | 13.66% | 10.72% | -25.79% | — | |
| Benchmarks | |||||||
| Balance-Sheet-Based Accruals Ratio, Competitors4 | |||||||
| Airbnb Inc. | — | — | — | — | — | — | |
| Booking Holdings Inc. | — | — | -468.72% | -68.38% | 2.00% | — | |
| Chipotle Mexican Grill Inc. | — | 23.30% | 18.41% | 18.43% | 13.32% | — | |
| DoorDash, Inc. | — | -14.30% | -21.00% | 112.44% | 126.46% | — | |
| McDonald’s Corp. | — | 11.01% | 9.94% | 8.46% | 0.56% | — | |
| Balance-Sheet-Based Accruals Ratio, Sector | |||||||
| Consumer Services | 0.00% | 5.80% | 3.11% | 4.58% | 1.21% | — | |
| Balance-Sheet-Based Accruals Ratio, Industry | |||||||
| Consumer Discretionary | 0.00% | 12.07% | 12.01% | 13.04% | 12.78% | — | |
Based on: 10-K (reporting date: 2025-09-28), 10-K (reporting date: 2024-09-29), 10-K (reporting date: 2023-10-01), 10-K (reporting date: 2022-10-02), 10-K (reporting date: 2021-10-03), 10-K (reporting date: 2020-09-27).
1 2025 Calculation
Net operating assets = Operating assets – Operating liabilities
= 28,552,700 – 24,034,100 = 4,518,600
2 2025 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2025 – Net operating assets2024
= 4,518,600 – 4,583,600 = -65,000
3 2025 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × -65,000 ÷ [(4,518,600 + 4,583,600) ÷ 2] = -1.43%
4 Click competitor name to see calculations.
- Net Operating Assets
- Over the five-year period, net operating assets demonstrated a consistent upward trend from 2,683,400 thousand US dollars to a peak of 4,583,600 thousand US dollars in the fourth period, before a slight decrease to 4,518,600 thousand US dollars in the final period. This overall increase indicates a substantial expansion in the company’s operating asset base over the timeframe.
- Balance-Sheet-Based Aggregate Accruals
- The aggregate accruals fluctuated significantly. Starting with a negative value of -794,600 thousand US dollars in the first period, it shifted to positive figures in the subsequent three periods, reaching a maximum of 1,158,200 thousand US dollars at the fourth measurement. The last period showed a return to a negative accrual of -65,000 thousand US dollars. These swings suggest variability in non-cash components affecting earnings quality such as changes in working capital or provisions.
- Balance-Sheet-Based Accruals Ratio
- The accruals ratio mirrors the variability in aggregate accruals. It started significantly negative at -25.79% in the first period, turning positive in the next three periods with a peak of 28.92% in the fourth period, then declining sharply to -1.43% in the last period. This pattern highlights the fluctuating proportion of accruals relative to net operating assets, indicating varying degrees of earnings quality influenced by accrual accounting.
- Summary Insights
- The data indicates a steady growth in net operating assets over the years, reflecting expansion or increased investment in operating resources. However, the considerable variability and volatility in balance-sheet-based aggregate accruals and their ratio suggest fluctuations in accrual-based adjustments, which may impact the sustainability and reliability of reported earnings. The large positive accruals in the middle years followed by negative or near-zero values could warrant closer examination regarding the nature of these accruals and their drivers.
Cash-Flow-Statement-Based Accruals Ratio
Starbucks Corp., cash flow statement computation of aggregate accruals
US$ in thousands
| Sep 28, 2025 | Sep 29, 2024 | Oct 1, 2023 | Oct 2, 2022 | Oct 3, 2021 | Sep 27, 2020 | ||
|---|---|---|---|---|---|---|---|
| Net earnings attributable to Starbucks | 1,856,400) | 3,760,900) | 4,124,500) | 3,281,600) | 4,199,300) | 928,300) | |
| Less: Net cash provided by operating activities | 4,747,500) | 6,095,600) | 6,008,700) | 4,397,300) | 5,989,100) | 1,597,800) | |
| Less: Net cash used in investing activities | (2,485,400) | (2,699,200) | (2,270,800) | (2,146,300) | (319,500) | (1,711,500) | |
| Cash-flow-statement-based aggregate accruals | (405,700) | 364,500) | 386,600) | 1,030,600) | (1,470,300) | 1,042,000) | |
| Financial Ratio | |||||||
| Cash-flow-statement-based accruals ratio1 | -8.91% | 9.10% | 12.06% | 36.35% | -47.73% | — | |
| Benchmarks | |||||||
| Cash-Flow-Statement-Based Accruals Ratio, Competitors2 | |||||||
| Airbnb Inc. | — | — | — | — | — | — | |
| Booking Holdings Inc. | — | — | -519.27% | -67.03% | -11.13% | — | |
| Chipotle Mexican Grill Inc. | — | 13.33% | 24.18% | 30.18% | -9.35% | — | |
| DoorDash, Inc. | — | -63.76% | -64.28% | -68.90% | 159.10% | — | |
| McDonald’s Corp. | — | 12.31% | 6.77% | 5.35% | 2.17% | — | |
| Cash-Flow-Statement-Based Accruals Ratio, Sector | |||||||
| Consumer Services | 0.00% | -1.61% | -4.40% | -8.29% | -5.57% | — | |
| Cash-Flow-Statement-Based Accruals Ratio, Industry | |||||||
| Consumer Discretionary | 0.00% | 9.43% | 4.25% | 1.57% | 11.50% | — | |
Based on: 10-K (reporting date: 2025-09-28), 10-K (reporting date: 2024-09-29), 10-K (reporting date: 2023-10-01), 10-K (reporting date: 2022-10-02), 10-K (reporting date: 2021-10-03), 10-K (reporting date: 2020-09-27).
1 2025 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × -405,700 ÷ [(4,518,600 + 4,583,600) ÷ 2] = -8.91%
2 Click competitor name to see calculations.
The annual financial reporting quality measures show notable shifts over the observed periods, reflecting changing dynamics in the company's operating assets and accrual management.
- Net Operating Assets
- The net operating assets display a consistent upward trend from approximately 2.68 billion to 4.59 billion over the first four reported years, followed by a slight decline in the final year to about 4.52 billion. This overall increase suggests an expansion in operating asset investment, possibly indicative of business growth or increased operational capacity. The modest decrease in the last year may denote strategic asset optimization or divestitures.
- Cash-Flow-Statement-Based Aggregate Accruals
- The aggregate accruals exhibit considerable volatility across the periods. Starting with a significant negative value near -1.47 billion, the figure swings to a positive 1.03 billion in the next year, then gradually decreases through positive values down to approximately 365 million, before turning negative again at around -406 million in the most recent year. This pattern indicates fluctuations in earnings quality and accrual adjustments, signaling variable recognition of revenues and expenses relative to cash flows.
- Cash-Flow-Statement-Based Accruals Ratio
- The accruals ratio corresponds with the aggregate accruals trend, moving from a substantial negative percentage (-47.73%) toward positive figures, peaking at 36.35%, then progressively declining back toward a negative ratio (-8.91%) in the final year. These changes underscore shifts in the relationship between accrual earnings and operating cash flows, with the initial periods reflecting a heavier reliance on accruals that might negatively affect earnings quality, followed by an improvement, and then a slight deterioration in the latest period.
Overall, the data reveals a company experiencing growth in operating assets paired with variable accrual patterns that point toward fluctuating financial reporting quality. The return to a negative accrual ratio in the most recent year merits attention, as it may suggest emerging challenges in aligning reported earnings with cash flow realities.