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
AmerisourceBergen Corp., balance sheet computation of aggregate accruals
US$ in thousands
| Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | ||
|---|---|---|---|---|---|---|---|
| Operating Assets | |||||||
| Total assets | 56,560,616) | 57,337,805) | 44,274,830) | 39,171,980) | 37,669,838) | 35,316,470) | |
| Less: Cash and cash equivalents | 3,388,189) | 2,547,142) | 4,597,746) | 3,374,194) | 2,492,516) | 2,435,115) | |
| Operating assets | 53,172,427) | 54,790,663) | 39,677,084) | 35,797,786) | 35,177,322) | 32,881,355) | |
| Operating Liabilities | |||||||
| Total liabilities | 56,489,343) | 56,753,394) | 45,114,466) | 36,178,774) | 34,619,877) | 33,252,009) | |
| Less: Short-term debt | 1,070,473) | 300,213) | 501,259) | 139,012) | 151,657) | 12,121) | |
| Less: Long-term debt, net of current portion | 4,632,360) | 6,383,711) | 3,618,261) | 4,033,880) | 4,158,532) | 3,429,934) | |
| Operating liabilities | 50,786,510) | 50,069,470) | 40,994,946) | 32,005,882) | 30,309,688) | 29,809,954) | |
| Net operating assets1 | 2,385,917) | 4,721,193) | (1,317,862) | 3,791,904) | 4,867,634) | 3,071,401) | |
| Balance-sheet-based aggregate accruals2 | (2,335,276) | 6,039,055) | (5,109,766) | (1,075,730) | 1,796,233) | —) | |
| Financial Ratio | |||||||
| Balance-sheet-based accruals ratio3 | -65.72% | 354.89% | -413.07% | -24.84% | 45.25% | — | |
| Benchmarks | |||||||
| Balance-Sheet-Based Accruals Ratio, Competitors4 | |||||||
| Abbott Laboratories | -0.73% | -1.76% | -1.55% | — | — | — | |
| Cigna Group | -7.83% | 4.17% | -7.30% | — | — | — | |
| CVS Health Corp. | -9.86% | -3.68% | -0.89% | — | — | — | |
| Elevance Health Inc. | 0.32% | 14.93% | -15.16% | — | — | — | |
| Humana Inc. | -44.43% | 111.97% | 18.14% | — | — | — | |
| Intuitive Surgical Inc. | -10.21% | 50.02% | -8.55% | — | — | — | |
| Medtronic PLC | -1.37% | 3.72% | -1.48% | — | — | — | |
| UnitedHealth Group Inc. | 17.32% | 4.32% | 5.27% | — | — | — | |
| Balance-Sheet-Based Accruals Ratio, Sector | |||||||
| Health Care Equipment & Services | -1.21% | 4.56% | -1.66% | 200.00% | — | — | |
| Balance-Sheet-Based Accruals Ratio, Industry | |||||||
| Health Care | 2.32% | 5.47% | 10.63% | 200.00% | — | — | |
Based on: 10-K (reporting date: 2022-09-30), 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30).
1 2022 Calculation
Net operating assets = Operating assets – Operating liabilities
= 53,172,427 – 50,786,510 = 2,385,917
2 2022 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2022 – Net operating assets2021
= 2,385,917 – 4,721,193 = -2,335,276
3 2022 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × -2,335,276 ÷ [(2,385,917 + 4,721,193) ÷ 2] = -65.72%
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, AmerisourceBergen Corp. improved earnings quality from 2021 to 2022. |
Cash-Flow-Statement-Based Accruals Ratio
AmerisourceBergen Corp., cash flow statement computation of aggregate accruals
US$ in thousands
| Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | ||
|---|---|---|---|---|---|---|---|
| Net income (loss) attributable to AmerisourceBergen Corporation | 1,698,820) | 1,539,932) | (3,408,716) | 855,365) | 1,658,405) | 364,484) | |
| Less: Net cash provided by operating activities | 2,703,088) | 2,666,586) | 2,207,040) | 2,344,023) | 1,411,388) | 1,504,138) | |
| Less: Net cash used in investing activities | (368,437) | (6,141,577) | (379,871) | (375,832) | (1,111,114) | (498,041) | |
| Cash-flow-statement-based aggregate accruals | (635,831) | 5,014,923) | (5,235,885) | (1,112,826) | 1,358,131) | (641,613) | |
| Financial Ratio | |||||||
| Cash-flow-statement-based accruals ratio1 | -17.89% | 294.71% | -423.27% | -25.70% | 34.21% | — | |
| Benchmarks | |||||||
| Cash-Flow-Statement-Based Accruals Ratio, Competitors2 | |||||||
| Abbott Laboratories | -2.08% | -3.29% | -2.65% | — | — | — | |
| Cigna Group | -7.06% | 2.43% | -6.53% | — | — | — | |
| CVS Health Corp. | -6.15% | -4.20% | -2.54% | — | — | — | |
| Elevance Health Inc. | 8.35% | 30.34% | 4.96% | — | — | — | |
| Humana Inc. | -7.68% | 91.38% | 24.85% | — | — | — | |
| Intuitive Surgical Inc. | -20.88% | 33.51% | 10.64% | — | — | — | |
| Medtronic PLC | -0.97% | 0.35% | 1.16% | — | — | — | |
| UnitedHealth Group Inc. | 21.73% | 5.77% | 6.56% | — | — | — | |
| Cash-Flow-Statement-Based Accruals Ratio, Sector | |||||||
| Health Care Equipment & Services | 1.95% | 4.01% | -0.04% | 0.23% | — | — | |
| Cash-Flow-Statement-Based Accruals Ratio, Industry | |||||||
| Health Care | 2.34% | 6.45% | 6.66% | 3.36% | — | — | |
Based on: 10-K (reporting date: 2022-09-30), 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30).
1 2022 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × -635,831 ÷ [(2,385,917 + 4,721,193) ÷ 2] = -17.89%
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, AmerisourceBergen Corp. improved earnings quality from 2021 to 2022. |