Stock Analysis on Net

CVS Health Corp. (NYSE:CVS) 

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

CVS Health Corp., balance sheet computation of aggregate accruals

US$ in millions

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Operating Assets
Total assets 253,215 249,728 228,275 232,999 230,715
Less: Cash and cash equivalents 8,586 8,196 12,945 9,408 7,854
Less: Investments 2,407 3,259 2,778 3,117 3,000
Operating assets 242,222 238,273 212,552 220,474 219,861
Operating Liabilities
Total liabilities 177,485 173,092 156,960 157,618 161,014
Less: Short-term debt 2,119 200
Less: Current portion of long-term debt 3,624 2,772 1,778 4,205 5,440
Less: Long-term debt, excluding current portion 60,527 58,638 50,476 51,971 59,207
Operating liabilities 111,215 111,482 104,706 101,442 96,367
 
Net operating assets1 131,007 126,791 107,846 119,032 123,494
Balance-sheet-based aggregate accruals2 4,216 18,945 (11,186) (4,462)
Financial Ratio
Balance-sheet-based accruals ratio3 3.27% 16.15% -9.86% -3.68%
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
Abbott Laboratories 15.62% 6.06% -0.73% -1.76%
Cigna Group -5.29% -0.99% -7.83% 4.17%
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
= 242,222111,215 = 131,007

2 2024 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2024 – Net operating assets2023
= 131,007126,791 = 4,216

3 2024 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × 4,216 ÷ [(131,007 + 126,791) ÷ 2] = 3.27%

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, CVS Health Corp. improved earnings quality from 2023 to 2024.

Cash-Flow-Statement-Based Accruals Ratio

CVS Health Corp., 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 income attributable to CVS Health 4,614 8,344 4,149 7,910 7,179
Less: Net cash provided by operating activities 9,107 13,426 16,177 18,265 15,865
Less: Net cash used in investing activities (7,613) (20,889) (5,047) (5,261) (5,534)
Cash-flow-statement-based aggregate accruals 3,120 15,807 (6,981) (5,094) (3,152)
Financial Ratio
Cash-flow-statement-based accruals ratio1 2.42% 13.47% -6.15% -4.20%
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
Abbott Laboratories 14.32% 3.55% -2.08% -3.29%
Cigna Group -7.23% -2.14% -7.06% 2.43%
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 × 3,120 ÷ [(131,007 + 126,791) ÷ 2] = 2.42%

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, CVS Health Corp. improved earnings quality from 2023 to 2024.