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.
Virtutone Networks's Sloan Ratio for the quarter that ended in Oct. 2014 was 7.27%.
Warning Sign:
When Sloan Ratio (56.5)% higher than 25% or lower than -25%, earnings are more likely to be made up of accruals.
As of Oct. 2014, Virtutone Networks has a Sloan Ratio of 7.27%, indicating the company is in the safe zone and there is no funny business with accruals.
Virtutone Networks Sloan Ratio % Historical Data
The historical data trend for Virtutone Networks'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 Virtutone Networks's Sloan Ratio %
For the Telecom Services subindustry, Virtutone Networks'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.
Virtutone Networks's Sloan Ratio % Distribution in the Telecommunication Services Industry
For the Telecommunication Services industry and Communication Services sector, Virtutone Networks's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where Virtutone Networks's Sloan Ratio % falls into.
Virtutone Networks 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.
Virtutone Networks's Sloan Ratio for the fiscal year that ended in Jan. 2014 is calculated as
Virtutone Networks's Net Income for the trailing twelve months (TTM) ended in Oct. 2014 was -0.447 (Jan. 2014 ) + 0.031 (Apr. 2014 ) + 0.582 (Jul. 2014 ) + 0.353 (Oct. 2014 ) = $0.52 Mil.
Virtutone Networks's Cash Flow from Operations for the trailing twelve months (TTM) ended in Oct. 2014 was -4.426 (Jan. 2014 ) + -0.097 (Apr. 2014 ) + 0.266 (Jul. 2014 ) + 3.206 (Oct. 2014 ) = $-1.05 Mil.
Virtutone Networks's Cash Flow from Investing for the trailing twelve months (TTM) ended in Oct. 2014 was -0.232 (Jan. 2014 ) + -0.11 (Apr. 2014 ) + -0.248 (Jul. 2014 ) + -0.076 (Oct. 2014 ) = $-0.67 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.
Virtutone Networks (OTCPK:VRTWF) 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 Oct. 2014, Virtutone Networks has a Sloan Ratio of 7.27%, indicating the company is in the safe zone and there is no funny business with accruals.
Virtutone Networks Sloan Ratio % Related Terms
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Virtutone Networks (Virtutone Networks) Business Description
Virtutone Networks, Inc. is incorporated under the laws of the Province of Alberta. The Company is a provider of Voice over Internet Protocol, Fax over Internet Protocol, and related phone services to business and residential customers.
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