Richard Sloan from the University of Michigan was first to document what is referred to as the "accrual anomaly". His 1996 paper found that shares of companies with small or negative accruals vastly outperform (+10%) those of companies with large ones.
Forest Laboratories's Sloan Ratio for the quarter that ended in Mar. 2014 was 20.57%.
As of Mar. 2014, Forest Laboratories has a Sloan Ratio of 20.57%, indicating there is a warning stage of accrual build up.
Forest Laboratories Sloan Ratio % Historical Data
The historical data trend for Forest Laboratories's Sloan Ratio % can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Competitive Comparison of Forest Laboratories's Sloan Ratio %
For the Drug Manufacturers - Specialty & Generic subindustry, Forest Laboratories's Sloan Ratio %, along with its competitors' market caps and Sloan Ratio % data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
Forest Laboratories's Sloan Ratio % Distribution in the Drug Manufacturers Industry
For the Drug Manufacturers industry and Healthcare sector, Forest Laboratories's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where Forest Laboratories's Sloan Ratio % falls into.
Forest Laboratories Sloan Ratio % Calculation
Earnings contain a lot of non cash earnings which is called accruals. The Sloan ratio is a way to identify firms with low non-cash or accrual-derived earnings relative to their cash flow.
Forest Laboratories's Sloan Ratio for the fiscal year that ended in Mar. 2014 is calculated as
Forest Laboratories's Net Income for the trailing twelve months (TTM) ended in Mar. 2014 was 17.645 (Jun. 2013 ) + 52.35 (Sep. 2013 ) + 13.112 (Dec. 2013 ) + 39.103 (Mar. 2014 ) = €122 Mil.
Forest Laboratories's Cash Flow from Operations for the trailing twelve months (TTM) ended in Mar. 2014 was -21.373 (Jun. 2013 ) + 116.788 (Sep. 2013 ) + 148.142 (Dec. 2013 ) + 101.242 (Mar. 2014 ) = €345 Mil.
Forest Laboratories's Cash Flow from Investing for the trailing twelve months (TTM) ended in Mar. 2014 was -70.555 (Jun. 2013 ) + -79.162 (Sep. 2013 ) + -12.982 (Dec. 2013 ) + -1847.555 (Mar. 2014 ) = €-2,010 Mil.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Forest Laboratories (FRA:FQX) Sloan Ratio % Explanation
A former University of Michigan researcher, Richard Sloan's 1996 paper found that shares of companies with small or negative accruals vastly outperform (+10%) those of companies with large ones. In fact, for the 40-year period between 1962 and 2001, buying the lowest accrual companies and shorting the highest accrual companies resulted in an average annual compounded return of 18%, more than double the S&P 500's 7.4% annual return over the same period.
If the Sloan Ratio is between -10% and 10%, the company is in the safe zone and there is no funny business with accruals.
If the Sloan Ratio is less than between -25% and -10% on the negative side, and between 10% and 25% on the positive side, this is a warning stage of accrual build up.
If the Sloan Ratio is less than -25% or greater than 25%, and this ratio is consistent over several quarters or even years, be careful. Earnings are highly likely to be made up of accruals.
As of Mar. 2014, Forest Laboratories has a Sloan Ratio of 20.57%, indicating there is a warning stage of accrual build up.
Forest Laboratories Sloan Ratio % Related Terms
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Forest Laboratories (FRA:FQX) Business Description
Forest Laboratories, Inc. is a Delaware corporation organized in 1956. The Company develops, manufactures and sells branded forms of ethical drug products most of which require a physician's prescription. The Company's most important United States products are marketed directly, or 'detailed,' to physicians by its salesforces. It emphasizes detailing to physicians of those branded ethical drugs which have the most potential for growth and benefit to patients. The Company also develops and introduces new products, including products developed in collaboration with licensing partners. The Company's products include those developed by it and those acquired from other pharmaceutical companies and integrated into its marketing and distribution systems. It actively promotes in the United States those branded products which have the most potential for growth and patient benefit, and which enable its salesforces to concentrate on groups of physicians who are high prescribers of its products. Such products include: Lexapro, its SSRI for the treatment of major depression in adults and adolescents and GAD in adults; Namenda, its NMDA antagonist for the treatment of moderate and severe Alzheimer's disease; Bystolic, its beta-blocker for the treatment of hypertension; and Savella, its newest product, an SNRI for the management of fibromyalgia. The Company's United Kingdom and Ireland subsidiaries sell both ethical products and over-the-counter preparations. Their most important products include Sudocrem, a topical preparation for the treatment of diaper rash; Colomycin, an antibiotic used in the treatment of cystic fibrosis; Infacol, used to treat infant colic; and Exorex, used in the treatment of eczema and psoriasis. The pharmaceutical industry is subject to comprehensive government regulation which substantially increases the difficulty and cost incurred in obtaining the approval to market newly proposed drug products and maintaining the approval to market existing drugs.
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