Company introduction

Accenture is a leading global professional services company, providing a broad range of services and solutions across Strategy & Consulting, Technology, Operations, Industry X and Song. It serve clients in three geographic markets: North America, Europe and Growth Markets (Asia Pacific, Latin America, Africa and the Middle East).

Balance Sheet Analysis

Accenture’s fiscal year ends on August 31, 2023.

In 2023 and 2022, Accenture’s total assets were $51.25 billion and $47.26 billion, respectively.

Total assets increased by 8.4% year-on-year in 2023.

The most striking is goodwill. In 2023 and 2022, goodwill reached $15.57 billion and $13.1 billion, respectively.

This shows that Accenture has made a lot of acquisitions in the past. In the cash flow statement, this is also proved by the outflow of cash flow from investing activities.

In 2023, Accenture’s total current assets were $23.38 billion and current liabilities were $18 billion.

We can get a current ratio: 1.3.

In fact, the current ratio may be underestimated.

Among current liabilities, the amount of deferred revenues in 2023 was $5 billion. Accenture only needs to provide services to customers and does not need to repay this amount.

Deducting deferred revenues from current liabilities, the adjusted current ratio is 1.8.

Accenture is very liquid.

In 2023, Accenture’s total debt was $24.8 billion, with a debt ratio of only 48%.

The amount of total liabilities is roughly equivalent to the amount of current assets, so Accenture’s solvency is very strong.

We can say that Accenture’s balance sheet is very healthy.

Profitability Analysis

First of all, don’t expect too much from Accenture. It has about 730,000 employees.

In 2023, 2022, and 2021, Accenture’s revenues were $64.1 billion, $61.6 billion, and $50.5 billion, respectively.

In 2023, the revenues increased by 4% year-on-year.

In 2022, the revenues increased by 22% year-on-year.

In 2023, 2022, and 2021, Accenture’s net profit was $7 billion, $7 billion, and $6 billion, respectively.

In 2023, 2022, and 2021, the net profit margin was 11%, 11.4%, and 11.9% ,respectively.

Accenture’s net profit margin is relatively stable.

cash flow analysis

In 2023, 2022, and 2021, Accenture’s net cash from operating activities reached $9.5 billion, $9.5 billion, and $8.98 billion, respectively.

The net cash provided by Accenture’s operating activities exceeds net profit, which shows that Accenture’s profit quality is relatively high.

In 2023, 2022, and 2021, the amount of property and equipment purchased was $520 million, $720 million, and $580 million.

How about the free cash flow?

In 2023, 2022, and 2011, Accenture’s free cash flow was $8.98 billion, $8.78 billion, and $8.4 billion, respectively.

In fact, we think Accenture’s free cash flow is overvalued because there is also an account that contributes to the outflow of cash flow from investing activities.

In 2023, 2022, and 2021, purchases of businesses and investments, net of cash acquired reached $2.5 billion, $3.45 billion, and $4.17 billion, respectively.

Accenture has made acquisitions over the past three years. Therefore, acquisition activity is a regular occurrence rather than an accident, and this amount should be subtracted from free cash flow.

In 2023, Accenture returned $7.16 billion in cash to shareholders, including $4.3 billion in stock repurchases and $2.8 billion in cash dividends.

In 2022, Accenture returned $6.57 billion in cash to shareholders, including $4.12 billion in stock repurchases and $2.46 billion in cash dividends.

In 2021, Accenture returned $5.93 billion in cash to shareholders, including $3.7 billion in stock repurchases and $2.23 billion in cash dividends.

We can regard the cash that Accenture returns to shareholders as the real return on investment for shareholders, which is reasonable.

Financial results for the quarter period ended November 30, 2023

In the three months ended November 30, 2023, Accenture’s revenue was $16.2 billion.

In the three months ended November 30, 2022, Accenture’s revenue was $15.7 billion.

In the three months ended November 30, 2023, Accenture’s revenue  increased by 3% year-on-year.

The increase is modest.

In the three months ended November 21, 2023, Accenture’s net profit was $2 billion, which was equivalent to the same period in 2022.

Summary

Accenture’s balance sheet is healthy, profitability is relatively strong, and cash flow is good.

Now, Accenture’s market capitalization is $233.6 billion, and we think $90 billion is a reasonable market capitalization, or $143.5 per share.

Disclaimer: The content is for reference only and does not constitute investment advice.