Stock Analysis on Net

Lowe’s Cos. Inc. (NYSE:LOW)

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

Lowe’s Cos. Inc., balance sheet computation of aggregate accruals

US$ in millions

Microsoft Excel
Jan 31, 2025 Feb 2, 2024 Feb 3, 2023 Jan 28, 2022 Jan 29, 2021 Jan 31, 2020
Operating Assets
Total assets 43,102 41,795 43,708 44,640 46,735 39,471
Less: Cash and cash equivalents 1,761 921 1,348 1,133 4,690 716
Less: Short-term investments 372 307 384 271 506 160
Operating assets 40,969 40,567 41,976 43,236 41,539 38,595
Operating Liabilities
Total liabilities 57,333 56,845 57,962 49,456 45,298 37,499
Less: Short-term borrowings 499 1,941
Less: Current maturities of long-term debt 2,586 537 585 868 1,112 597
Less: Long-term debt, excluding current maturities 32,901 35,384 32,876 23,859 20,668 16,768
Operating liabilities 21,846 20,924 24,002 24,729 23,518 18,193
 
Net operating assets1 19,123 19,643 17,974 18,507 18,021 20,402
Balance-sheet-based aggregate accruals2 (520) 1,669 (533) 486 (2,381)
Financial Ratio
Balance-sheet-based accruals ratio3 -2.68% 8.87% -2.92% 2.66% -12.39%
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
Amazon.com Inc. 26.40% 18.01% 32.91% 49.06%
Home Depot Inc. 34.02% -1.45% 15.25% 9.91% 21.77%
TJX Cos. Inc. 25.93% 7.22% 30.23% 73.65% -109.84%
Balance-Sheet-Based Accruals Ratio, Sector
Consumer Discretionary Distribution & Retail 0.00% 20.94% 16.15% 26.47% 31.88%
Balance-Sheet-Based Accruals Ratio, Industry
Consumer Discretionary 0.00% 12.16% 12.17% 12.67% 12.65%

Based on: 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29), 10-K (reporting date: 2020-01-31).

1 2025 Calculation
Net operating assets = Operating assets – Operating liabilities
= 40,96921,846 = 19,123

2 2025 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2025 – Net operating assets2024
= 19,12319,643 = -520

3 2025 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × -520 ÷ [(19,123 + 19,643) ÷ 2] = -2.68%

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, Lowe’s Cos. Inc. improved earnings quality from 2024 to 2025.

Cash-Flow-Statement-Based Accruals Ratio

Lowe’s Cos. Inc., cash flow statement computation of aggregate accruals

US$ in millions

Microsoft Excel
Jan 31, 2025 Feb 2, 2024 Feb 3, 2023 Jan 28, 2022 Jan 29, 2021 Jan 31, 2020
Net earnings 6,957 7,726 6,437 8,442 5,835 4,281
Less: Net cash provided by operating activities 9,625 8,140 8,589 10,113 11,049 4,296
Less: Net cash used in investing activities (1,738) (1,901) (1,309) (1,646) (1,894) (1,369)
Cash-flow-statement-based aggregate accruals (930) 1,487 (843) (25) (3,320) 1,354
Financial Ratio
Cash-flow-statement-based accruals ratio1 -4.80% 7.91% -4.62% -0.14% -17.28%
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
Amazon.com Inc. 16.87% -2.63% -8.54% 48.44%
Home Depot Inc. 32.13% -3.12% 14.43% 8.24% 14.26%
TJX Cos. Inc. 23.36% 3.04% 23.97% 55.57% -121.39%
Cash-Flow-Statement-Based Accruals Ratio, Sector
Consumer Discretionary Distribution & Retail 0.00% 13.19% 0.41% -4.02% 29.06%
Cash-Flow-Statement-Based Accruals Ratio, Industry
Consumer Discretionary 0.00% 9.69% 4.57% 1.83% 11.33%

Based on: 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29), 10-K (reporting date: 2020-01-31).

1 2025 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × -930 ÷ [(19,123 + 19,643) ÷ 2] = -4.80%

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, Lowe’s Cos. Inc. improved earnings quality from 2024 to 2025.