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High Accruals

Trading Term

Accruals are the non-cash net income components earned or incurred by a business and recorded as a result of accrual-based accounting. Businesses with large positive accruals generally have large non-cash earnings like sales on account that have not yet been paid by customers. Investors are wary of businesses that have large positive accruals over long periods of time. This flag identifies companies with high positive accruals, both in an absolute sense and also relative to the rest of the universe.

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