Western Digital Corp. (NASDAQ:WDC)

The net operating assets demonstrate a relatively stable pattern over the five-year period. Starting at 17,034 million US dollars in 2019, the figure slightly declined to 16,078 million in 2020 and remained virtually unchanged in 2021 at 16,076 million. A mild recovery occurred in 2022 with an increase to 16,916 million, followed by a slight decrease to 16,770 million in 2023. Overall, the net operating assets exhibit minor fluctuations without significant growth or contraction.

The aggregate accruals experienced notable volatility during the observed period. Beginning with a negative balance of -1,029 million US dollars in 2019, the magnitude of negative accruals increased to -1,352 million in 2020. In 2021, the negative accruals decreased substantially to -312 million, indicating a reduction in accrual-based adjustments. However, 2022 marked a reversal to positive accruals amounting to 812 million, signalling a significant shift in earnings quality components. The subsequent year brought the figure back to a negative territory at -536 million in 2023. This pattern indicates inconsistency in the cash-flow-statement-based accruals over time.

The accruals ratio, expressed as a percentage, mirrors the trends observed in the aggregate accruals with some additional insights. The ratio started at -5.93% in 2019 and declined further to -8.17% in 2020, reflecting an increased proportion of accruals relative to net operating assets. A notable improvement appeared in 2021 with the ratio moving closer to zero at -1.94%, which could suggest better quality of earnings. The 2022 figure stands out distinctly as positive 4.92%, indicating a reversal where accruals exceeded cash flows relative to assets, which may raise concerns regarding earnings quality for that year. In 2023, the ratio reverted to a negative -3.18%, pointing to a partial normalization but still revealing volatility and fluctuations in accrual quality over the period.