Total accruals ratio
factor.formula
Accrual ratio (gross)
The formula calculates the ratio of a company's total accrued earnings over the past 12 months to its average total assets, and is used to measure the non-cash portion of a company's earnings.
Total Accrued Earnings (TTM) Calculation Formula
This formula calculates the total accrued earnings for the past 12 months. Net income (Net Income) minus net cash flow from operating activities (CFO), which can be understood as the portion of net income that does not involve cash flow. This portion is more susceptible to the selection of accounting standards and management's accounting judgment, and has greater flexibility and subjectivity.
Average total assets calculation formula
This formula calculates the average of total assets at the beginning and end of the reporting period, which is used to measure the company's average asset size during the period and can smooth the volatility of total assets. Among them, TotalAssets_{Beginning} represents the total assets at the beginning of the reporting period, and TotalAssets_{Ending} represents the total assets at the end of the reporting period.
in:
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Total accrued earnings for the last 12 months.
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Net profit for the past 12 months.
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Net cash flows from operating activities for the last twelve months.
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Average total assets.
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Total assets at the beginning of the reporting period.
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Total assets at the end of the reporting period.
factor.explanation
The accrual earnings ratio (total) is an important indicator for measuring the quality of a company's earnings. It reflects the proportion of non-cash earnings in a company's earnings. A higher accrual earnings ratio means that the company's earnings rely more on accounting estimates and judgments rather than actual cash inflows, which may indicate lower earnings sustainability and higher earnings manipulation risks. Investors usually pay attention to this indicator and use it as an important reference for assessing a company's financial robustness and earnings quality. Abnormal fluctuations in this indicator may indicate a company's earnings management behavior, thereby affecting investment decisions.