Accrual Ratio Calculator

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Accrual Ratio Calculator

Measure earnings quality by comparing net income to operating cash flow relative to total assets.

Last updated: 2026-05-24T22:58:29.594Z

Results
Enter values to compute the accrual ratio.

About Accrual Ratio

The accrual ratio compares accounting profits to cash flow to assess earnings quality. Large positive accruals may indicate earnings not supported by cash, while negative accruals imply strong cash conversion.

Use this metric alongside cash flow statements and balance sheet analysis to evaluate sustainability of reported earnings.

How to Use

  1. Input net income and operating cash flow for the same period.
  2. Provide total assets to normalise accruals.
  3. Interpret low absolute accrual ratios as higher earnings quality.
  4. Investigate large positive accruals for potential accounting adjustments.
  5. Compare ratios across periods for trend analysis.

Example

Given Net Income $150,000 and OCF $120,000 with assets $1,000,000 → Accruals $30,000 → Accrual Ratio = 3.00% (High quality earnings).

FAQs

What does a high accrual ratio mean?
It can signal earnings not backed by cash flow.
Can accruals be negative?
Yes — negative accruals often indicate strong cash conversion.
Is it a standalone metric?
No — combine with other financial analysis.
What period should I use?
Use the same reporting period for NI and OCF.

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