Fundamental Glossary / Cash Flow Metrics
Accruals
The difference between profit and cash. Revenues and costs recorded before the cash moves.
Formula
A simple accruals measure is profit - operating cash flow. Balance-sheet accruals include accrued income, accrued expenses, and unbilled revenue.
What it means
Accrual accounting exists so that a period's profit reflects that period's effort, not the accident of when invoices were paid. Accruals are the entries that do this.
The Sloan-style accrual ratio compares the gap between earnings and cash with the asset base. High accruals have historically been a weaker signal than cash earnings.
How to read it
Rising accruals mean profit is running ahead of cash. That can be legitimate growth in receivables, or it can be recognition that is getting ahead of delivery.
What to watch
Accruals reverse. Revenue accrued and never collected becomes a write-off. The cash flow statement is where the reversal shows up.
This note explains the term. It is not a research recommendation, a target price, or a comment on any security. Ratios and regulatory thresholds change; use the latest filing or circular for a live figure.