Need Help Reading 26 Evaluating Financial Reporting Quality NOA

When evaluating aggregate accruals we compute the net operating assets NOA as Total assets - Cash - Total Liabilities - Total Debt.

I understand we have to exclude cash to get the accrual component but why do we have to exclude total debt?

I mean isn’t debt also a discretionary account?

Thanks

The above formula was incorrect. It should be (Total Asset - Cash) - (Total liabilities - Total Debt), in other words Total Asset - Cash - Total liabilities + Total Debt. It’s the difference between assets excluding “cash” portion and liabilities excluding “cash” portion, which is what the formula is trying to measure, i.e. the non-cash, or accruals, portion of the earnings.