Accrual ratio calculator
See how much of reported profit rests on accruals rather than cash: net operating assets rising from 1,250,000 to 1,430,000 give accruals of 180,000 and a ratio of 0.134328. High values have historically come before earnings reversals. Free in your browser.
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Worked example
- Noa start
- 1,250,000
- Noa end
- 1,430,000
- Accruals
- 180,000
- Average noa
- 1,340,000
- Accrual ratio
- 0.134328
The accrual ratio measures how much of a company's reported earnings come from accruals rather than from cash. Using the balance-sheet approach, it takes net operating assets at the start and end of a period, computes the change in accruals, and divides that change by the average net operating assets over the period. A high ratio signals that earnings lean heavily on accounting estimates, which historically precedes earnings reversals; a low or negative ratio suggests results are backed by cash. Send two numbers and get the ratio, the accruals figure and the average base in one call.
What the accrual ratio tells you
Net income mixes two very different ingredients: cash that actually moved, and accruals — revenue booked before it is collected, expenses deferred, depreciation schedules and other estimates that accountants layer on top of the cash reality. Accruals are necessary, but they are also the soft part of the income statement, the part where judgment and optimism can quietly inflate results. The accrual ratio isolates that soft part and expresses it relative to the size of the operating business.
Research going back to Sloan's 1996 study shows that firms with unusually high accrual ratios tend to see their earnings reverse in later periods, while firms with low or negative ratios often outperform. Reading the ratio is straightforward: values near zero mean earnings are mostly cash-backed; large positive values mean a growing share of profit exists only on paper; negative values mean accruals are unwinding, which usually strengthens the quality of reported earnings.
How the balance-sheet computation works
Net operating assets (NOA) are operating assets minus operating liabilities — everything the business uses to generate operating profit, stripped of financing items such as debt and equity. Over one period, the change in NOA equals the accruals the company recognized, because any operating profit that did not arrive or leave as cash accumulates inside those balances. The ratio is therefore (NOA at period end − NOA at period start) ÷ average NOA, where the average is the simple mean of the opening and closing figures.
Dividing by the average scales the accruals to the size of the operations, so a growing company is not penalized merely for being bigger this year than last.
Using it in screening and analysis workflows
Analysts typically compute the ratio across a whole universe of companies and rank them, because the signal is comparative: the decile with the highest accruals is where earnings-quality risk concentrates. A few practical rules keep the numbers meaningful: always use the same NOA definition for both dates, match the period length when comparing across firms, and treat the ratio as a red flag that invites a closer look at receivables, inventory and capitalization policy rather than as a verdict on its own.
Combined with cash-flow-based accrual measures, it gives a robust cross-check on earnings quality.
What you can do with it
Screen for earnings-quality risk
Rank a portfolio by accrual ratio and flag the names whose profits are growing mostly through accounting estimates instead of cash.
Cross-check a cash-flow accrual measure
Compare the balance-sheet ratio with a cash-flow-based accrual figure; when both point the same way, the signal about earnings quality is much stronger.
FAQ
Which inputs do I need?
Net operating assets at the start and at the end of the period: operating assets minus operating liabilities, computed with the same definition at both dates.
What is a good accrual ratio?
Values near zero indicate cash-backed earnings. Large positive values suggest profit is accumulating in accruals, which historically precedes earnings reversals; negative values mean accruals are unwinding.
Can the ratio be greater than 1 or negative?
Yes. If net operating assets more than double, the ratio exceeds 1; if they shrink, the ratio is negative. Both are valid and meaningful.
Is my financial data stored?
No. The numbers are processed in memory and discarded; only the computed result is returned.
What are net operating assets?
They are operating assets minus operating liabilities: everything the business uses to earn operating profit, without financing items such as debt and equity. Use the same definition for both dates.
Related tools
For developers — API access
Everything on this page is available programmatically. This section is for teams who want to wire it into their own systems; everyone else can just use the tool above.
API endpoint
Prefer to automate it? One authenticated POST creates the task; the result comes back by webhook or a signed link. The same capability also runs here on the web, by email and from Telegram — and soon from our app too.
Call it from your stack
curl -X POST https://api.kit.forhosting.com/fin/accrual-ratio \
-H "Authorization: Bearer $KIT_KEY" \
-H "Content-Type: application/json" \
-d '{"noa_start":1250000,"noa_end":1430000}'const res = await fetch("https://api.kit.forhosting.com/fin/accrual-ratio", {
method: "POST",
headers: {
"Authorization": `Bearer ${process.env.KIT_KEY}`,
"Content-Type": "application/json"
},
body: JSON.stringify({
"noa_start": 1250000,
"noa_end": 1430000
})
});
const { task_id } = await res.json();import os, requests
res = requests.post(
"https://api.kit.forhosting.com/fin/accrual-ratio",
headers={"Authorization": f"Bearer {os.environ['KIT_KEY']}"},
json={
"noa_start": 1250000,
"noa_end": 1430000
},
)
task_id = res.json()["task_id"]<?php
$res = file_get_contents("https://api.kit.forhosting.com/fin/accrual-ratio", false, stream_context_create([
"http" => [
"method" => "POST",
"header" => "Authorization: Bearer " . getenv("KIT_KEY") . "\r\nContent-Type: application/json",
"content" => '{"noa_start":1250000,"noa_end":1430000}',
],
]));
$task = json_decode($res, true);body := bytes.NewBufferString(`{"noa_start":1250000,"noa_end":1430000}`)
req, _ := http.NewRequest("POST", "https://api.kit.forhosting.com/fin/accrual-ratio", body)
req.Header.Set("Authorization", "Bearer "+os.Getenv("KIT_KEY"))
req.Header.Set("Content-Type", "application/json")
res, _ := http.DefaultClient.Do(req)Example request
{
"noa_start": 1250000,
"noa_end": 1430000
}Example response
{
"task_id": "tsk_a1b2c3d4e5f6a1b2c3d4e5f6",
"type": "fin.accrual_ratio",
"status": "queued",
"_links": {
"result": "/tasks/tsk_…/result"
}
}The API is asynchronous: the call returns a task_id immediately and the result arrives by webhook. Polling is capped at 1 req/s per task.
Pricing
Published price — no tokens, no invented credits. A failed task is never charged.
Errors
| HTTP | Code | Meaning |
|---|---|---|
401 | unauthorized | Missing or invalid API key. |
402 | insufficient_balance | Your balance doesn't cover the task price. |
404 | unknown_type | That task type doesn't exist. |
429 | rate_limited | Too many requests. Use the webhook instead of polling. |
Technical notes
How the balance-sheet computation works
This endpoint uses the balance-sheet formulation of aggregate accruals. The endpoint returns the raw accruals and the average base alongside the ratio, so you can audit every step. If the average is zero the ratio is mathematically undefined and the request is rejected with an invalid_input error rather than an infinity.
Using it in screening and analysis workflows
You can wire this endpoint into that kind of pipeline — pull balance-sheet lines from your data source, derive net operating assets for each period, and call the API once per company-year. It is deterministic and cheap at $0.002 per request, and the identical calculation runs free in the browser on this page, so you can validate a handful of cases by hand before automating thousands.
Integration use cases
Feed a fundamentals pipeline
Compute the ratio per company-year inside an automated scoring job that consumes balance-sheet data and prices each check at $0.002.
Technical questions
What does it cost?
$0.002 per request. It is also free to run in your browser on this page.
What happens if average net operating assets is zero?
The ratio is undefined, so the request fails with an invalid_input error and is not charged.