Stock Analysis on Net

United Parcel Service Inc. (NYSE:UPS)

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

United Parcel Service Inc., 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 70,070 70,857 71,124 69,405 62,408
Less: Cash and cash equivalents 6,112 3,206 5,602 10,255 5,910
Less: Marketable securities 206 2,866 1,993 338 406
Operating assets 63,752 64,785 63,529 58,812 56,092
Operating Liabilities
Total liabilities 53,327 53,543 51,321 55,136 61,739
Less: Current maturities of long-term debt, commercial paper and finance leases 1,838 3,348 2,341 2,131 2,623
Less: Long-term debt and finance leases, excluding current maturities 19,446 18,916 17,321 19,784 22,031
Operating liabilities 32,043 31,279 31,659 33,221 37,085
 
Net operating assets1 31,709 33,506 31,870 25,591 19,007
Balance-sheet-based aggregate accruals2 (1,797) 1,636 6,279 6,584
Financial Ratio
Balance-sheet-based accruals ratio3 -5.51% 5.00% 21.85% 29.53%
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
FedEx Corp. 3.63% 3.85% 0.91% 6.93% 7.01%
Uber Technologies Inc. 40.44% 21.78% -40.74% 31.28%
Union Pacific Corp. 1.61% 3.95% 3.63% 2.46%
United Airlines Holdings Inc. 0.97% 15.54% 3.50% -2.74%
Balance-Sheet-Based Accruals Ratio, Sector
Transportation 5.40% 7.66% 1.50% 10.61%
Balance-Sheet-Based Accruals Ratio, Industry
Industrials 4.97% -1.04% 0.29% 3.43%

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
= 63,75232,043 = 31,709

2 2024 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2024 – Net operating assets2023
= 31,70933,506 = -1,797

3 2024 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × -1,797 ÷ [(31,709 + 33,506) ÷ 2] = -5.51%

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, United Parcel Service Inc. deteriorated earnings quality from 2023 to 2024.

Cash-Flow-Statement-Based Accruals Ratio

United Parcel Service Inc., 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 5,782 6,708 11,548 12,890 1,343
Less: Net cash from operating activities 10,122 10,238 14,104 15,007 10,459
Less: Net cash used in investing activities (217) (7,133) (7,472) (3,818) (5,283)
Cash-flow-statement-based aggregate accruals (4,123) 3,603 4,916 1,701 (3,833)
Financial Ratio
Cash-flow-statement-based accruals ratio1 -12.64% 11.02% 17.11% 7.63%
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
FedEx Corp. 3.01% 3.32% 2.12% 3.01% 5.95%
Uber Technologies Inc. 28.63% 10.31% -49.13% 6.66%
Union Pacific Corp. 1.55% 3.67% 2.53% 0.47%
United Airlines Holdings Inc. -13.64% 7.35% 38.00% -10.59%
Cash-Flow-Statement-Based Accruals Ratio, Sector
Transportation 0.04% 6.33% 4.81% 1.28%
Cash-Flow-Statement-Based Accruals Ratio, Industry
Industrials 5.29% 1.67% -2.31% -8.91%

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 × -4,123 ÷ [(31,709 + 33,506) ÷ 2] = -12.64%

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, United Parcel Service Inc. deteriorated earnings quality from 2023 to 2024.