Operating Accruals

Operating Accruals

Operating Accruals (also called Percent Operating Accruals) is calculated as = (Net profit after tax – Net cash flow from operating) / |Net profit after tax| (Note this is an absolute value)

 

How to use the ratio

Available as a screening ratio: Yes

Available as an output column ratio: Yes (Look for it under the Quality heading)

 

How to select the lowest operating accrual companies

Companies with the lowest percent operating accruals typically have positive cash flows and earnings slightly above or below zero. This gives a large negative numerator (top number) and a small denominator (bottom number).

The best (lowest percent accrual) 10% companies typically has values from -5.7 to -3.1.

This implies that these companies have positive cash from operations and their negative accrual pushes their net income towards zero (if cash from operations was negative, a negative accrual would only push net income further from zero, making the denominator greater than the numerator and the resulting value greater than negative one).

To find companies with the highest ** set the slider from 90% to 100%.

 

Remember

All ratios are calculated on a trailing 12 months (TTM) basis.

This means the last twelve months (not the company’s financial year) is compared to the same period in the past.

We do this to make sure that the screener data includes the latest, most up to date, financial results of the company.

 

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