Stock Analysis on Net

Abbott Laboratories (NYSE:ABT) 

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

Abbott Laboratories, balance sheet computation of aggregate accruals

US$ in millions

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Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Operating Assets
Total assets 81,414 73,214 74,438 75,196 72,548
Less: Cash and cash equivalents 7,616 6,896 9,882 9,799 6,838
Less: Investments, primarily bank time deposits and U.S. treasury bills 351 383 288 450 310
Operating assets 73,447 65,935 64,268 64,947 65,400
Operating Liabilities
Total liabilities 33,513 34,387 37,533 39,172 39,545
Less: Short-term borrowings 213
Less: Current portion of long-term debt 1,500 1,080 2,251 754 7
Less: Long-term debt, excluding current portion 12,625 13,599 14,522 17,296 18,527
Operating liabilities 19,388 19,708 20,760 21,122 20,798
 
Net operating assets1 54,059 46,227 43,508 43,825 44,602
Balance-sheet-based aggregate accruals2 7,832 2,719 (317) (777)
Financial Ratio
Balance-sheet-based accruals ratio3 15.62% 6.06% -0.73% -1.76%
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
Cigna Group -5.29% -0.99% -7.83% 4.17%
CVS Health Corp. 3.27% 16.15% -9.86% -3.68%
Elevance Health Inc. 29.70% 7.14% 0.32% 14.93%
Intuitive Surgical Inc. 41.97% 15.55% -10.21% 50.02%
Medtronic PLC -0.93% 2.69% -1.37% 3.72% -1.48%
UnitedHealth Group Inc. 16.02% 13.41% 17.32% 4.32%
Balance-Sheet-Based Accruals Ratio, Sector
Health Care Equipment & Services 8.94% 9.27% -0.20% 2.57%
Balance-Sheet-Based Accruals Ratio, Industry
Health Care 4.65% 8.13% 2.80% 4.68%

Based on: 10-K (reporting date: 2024-12-31), 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).

1 2024 Calculation
Net operating assets = Operating assets – Operating liabilities
= 73,44719,388 = 54,059

2 2024 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2024 – Net operating assets2023
= 54,05946,227 = 7,832

3 2024 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × 7,832 ÷ [(54,059 + 46,227) ÷ 2] = 15.62%

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, Abbott Laboratories deteriorated earnings quality from 2023 to 2024.

Cash-Flow-Statement-Based Accruals Ratio

Abbott Laboratories, cash flow statement computation of aggregate accruals

US$ in millions

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Net earnings 13,402 5,723 6,933 7,071 4,495
Less: Net cash from operating activities 8,558 7,261 9,581 10,533 7,901
Less: Net cash used in investing activities (2,338) (3,133) (1,740) (2,008) (2,215)
Cash-flow-statement-based aggregate accruals 7,182 1,595 (908) (1,454) (1,191)
Financial Ratio
Cash-flow-statement-based accruals ratio1 14.32% 3.55% -2.08% -3.29%
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
Cigna Group -7.23% -2.14% -7.06% 2.43%
CVS Health Corp. 2.42% 13.47% -6.15% -4.20%
Elevance Health Inc. 16.15% 12.87% 8.35% 30.34%
Intuitive Surgical Inc. 30.74% 4.54% -20.88% 33.51%
Medtronic PLC -1.10% 1.80% -0.97% 0.35% 1.16%
UnitedHealth Group Inc. 7.71% 7.40% 21.73% 5.77%
Cash-Flow-Statement-Based Accruals Ratio, Sector
Health Care Equipment & Services 4.83% 6.59% 2.18% 2.40%
Cash-Flow-Statement-Based Accruals Ratio, Industry
Health Care 3.21% 8.44% 2.38% 5.78%

Based on: 10-K (reporting date: 2024-12-31), 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).

1 2024 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × 7,182 ÷ [(54,059 + 46,227) ÷ 2] = 14.32%

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, Abbott Laboratories deteriorated earnings quality from 2023 to 2024.