The ranking measure: Ranked by cash-based operating profitability, following Ball, Gerakos, Linnainmaa and Nikolaev (2016): trailing-twelve-month revenue minus cost of revenue minus selling, general and administrative expense (research and development is not deducted), less the 12-month increase in receivables, inventory and prepaid expenses, plus the increase in deferred revenue, accounts payable and accrued expenses, divided by total assets at the period end, from SEC filings. Approximations: working-capital changes are balance-sheet differences between the period end and a year earlier; a line a company reports at neither date counts as zero (listed for each company); where payables and accrued expenses are reported as one line, that line is used; prepaid expenses may include other current assets where the company reports them together.

Who is included: Passes data-quality checks; revenue of at least $100M; gross profit, SG&A, receivables and payables reported for the period and a year earlier; not a bank, insurer or REIT.

A new edition is published each calendar quarter; past editions are kept unchanged. Observations, not recommendations — a position on this ranking is a description of reported figures, never advice.

Research cited

  • Ball, R., Gerakos, J., Linnainmaa, J. T., & Nikolaev, V. (2016). Accruals, cash flows, and operating profitability in the cross section of stock returns. Journal of Financial Economics.
  • Sloan, R. G. (1996). Do stock prices fully reflect information in accruals and cash flows about future earnings?. The Accounting Review.