Stock Analysis on Net

Trane Technologies plc (NYSE:TT)

This company has been moved to the archive! The financial data has not been updated since May 3, 2023.

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

Trane Technologies plc, balance sheet computation of aggregate accruals

US$ in thousands

Microsoft Excel
Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
Operating Assets
Total assets 18,081,600 18,059,800 18,156,700 20,492,300 17,914,900
Less: Cash and cash equivalents 1,220,500 2,159,200 3,289,900 1,303,600 903,400
Operating assets 16,861,100 15,900,600 14,866,800 19,188,700 17,011,500
Operating Liabilities
Total liabilities 11,976,400 11,786,700 11,729,600 13,179,900 10,850,100
Less: Short-term borrowings and current maturities of long-term debt 1,048,000 350,400 775,600 650,500 350,600
Less: Long-term debt,excluding current maturities 3,788,300 4,491,700 4,496,500 4,922,900 3,740,700
Operating liabilities 7,140,100 6,944,600 6,457,500 7,606,500 6,758,800
 
Net operating assets1 9,721,000 8,956,000 8,409,300 11,582,200 10,252,700
Balance-sheet-based aggregate accruals2 765,000 546,700 (3,172,900) 1,329,500
Financial Ratio
Balance-sheet-based accruals ratio3 8.19% 6.30% -31.74% 12.18%
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
Boeing Co. -12.09% 30.23% 75.78%
Caterpillar Inc. 1.82% 4.22% -1.86%
Eaton Corp. plc 2.87% 10.92% -8.45%
GE Aerospace -7.82% -33.29% -8.79%
Honeywell International Inc. -1.99% 9.04% 2.69%
Lockheed Martin Corp. 15.67% 23.38% 5.01%
RTX Corp. 1.57% 1.48% 18.38%
Balance-Sheet-Based Accruals Ratio, Sector
Capital Goods -0.33% -0.06% 7.00% 200.00%
Balance-Sheet-Based Accruals Ratio, Industry
Industrials 0.12% 3.77% 5.75% 200.00%

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

1 2022 Calculation
Net operating assets = Operating assets – Operating liabilities
= 16,861,1007,140,100 = 9,721,000

2 2022 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2022 – Net operating assets2021
= 9,721,0008,956,000 = 765,000

3 2022 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × 765,000 ÷ [(9,721,000 + 8,956,000) ÷ 2] = 8.19%

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, Trane Technologies plc deteriorated earnings quality from 2021 to 2022.

Cash-Flow-Statement-Based Accruals Ratio

Trane Technologies plc, cash flow statement computation of aggregate accruals

US$ in thousands

Microsoft Excel
Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
Net earnings attributable to Trane Technologies plc 1,756,500 1,423,400 854,900 1,410,900 1,337,600
Less: Net cash provided by operating activities 1,698,700 1,594,400 1,766,200 1,956,300 1,474,500
Less: Net cash used in investing activities (539,800) (545,700) (338,500) (1,780,000) (629,400)
Cash-flow-statement-based aggregate accruals 597,600 374,700 (572,800) 1,234,600 492,500
Financial Ratio
Cash-flow-statement-based accruals ratio1 6.40% 4.32% -5.73% 11.31%
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
Boeing Co. -50.32% -43.09% 172.40%
Caterpillar Inc. 3.26% 5.38% -4.23%
Eaton Corp. plc 4.55% 7.52% -8.43%
GE Aerospace -15.92% -53.22% -20.57%
Honeywell International Inc. -0.79% 2.16% -1.79%
Lockheed Martin Corp. -1.36% -10.24% 4.50%
RTX Corp. 0.87% -1.96% -12.62%
Cash-Flow-Statement-Based Accruals Ratio, Sector
Capital Goods -5.98% -13.86% -1.61% -15.76%
Cash-Flow-Statement-Based Accruals Ratio, Industry
Industrials -4.47% -8.82% -2.05% -11.47%

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

1 2022 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × 597,600 ÷ [(9,721,000 + 8,956,000) ÷ 2] = 6.40%

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, Trane Technologies plc deteriorated earnings quality from 2021 to 2022.