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.
American Capital's Sloan Ratio for the quarter that ended in Sep. 2016 was -88.85%.
As of Sep. 2016, American Capital has a Sloan Ratio of -88.85%, indicating there is a warning stage of accrual build up.
American Capital Sloan Ratio % Historical Data
The historical data trend for American Capital'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 American Capital's Sloan Ratio %
For the Asset Management subindustry, American Capital'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.
American Capital's Sloan Ratio % Distribution in the Asset Management Industry
For the Asset Management industry and Financial Services sector, American Capital's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where American Capital's Sloan Ratio % falls into.
American Capital 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.
American Capital's Sloan Ratio for the fiscal year that ended in Dec. 2015 is calculated as
American Capital's Net Income for the trailing twelve months (TTM) ended in Sep. 2016 was -227 (Dec. 2015 ) + -80 (Mar. 2016 ) + 106 (Jun. 2016 ) + 141 (Sep. 2016 ) = $-60.0 Mil.
American Capital's Cash Flow from Operations for the trailing twelve months (TTM) ended in Sep. 2016 was 125 (Dec. 2015 ) + 50 (Mar. 2016 ) + 73 (Jun. 2016 ) + 52 (Sep. 2016 ) = $300.0 Mil.
American Capital's Cash Flow from Investing for the trailing twelve months (TTM) ended in Sep. 2016 was 1739 (Dec. 2015 ) + 488 (Mar. 2016 ) + 712 (Jun. 2016 ) + 877 (Sep. 2016 ) = $3,816.0 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.
American Capital (NAS:ACAS) 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 Sep. 2016, American Capital has a Sloan Ratio of -88.85%, indicating there is a warning stage of accrual build up.
American Capital Sloan Ratio % Related Terms
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American Capital (American Capital) Business Description
American Capital Ltd was founded in 1986 and incorporated in Delaware. On August 29, 1997, it completed an initial public offering and became a non-diversified closed end investment company that has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended. It is an asset management and private equity firm. The Company originates, underwrites and manages investments in middle market private equity, leveraged finance, real estate, energy and structured products. It invests in senior and mezzanine debt and equity in buyouts of private companies sponsored by it or sponsored by other private equity funds and provide capital directly to early stage and mature private and small public companies. Its business objectives are to increase its net earnings and net asset value by making investments with attractive current yields and/or potential for equity appreciation and realized gains. Its investments can be divided into the following six business lines: American Capital One Stop Buyouts, Sponsor Finance Investments, Direct and Other Investments, European Capital, Asset Management and Structured Products. The Company competes with strategic buyers, private equity funds, mezzanine debt funds and other buyers and financing sources, including traditional financial services companies such as finance companies, commercial banks, investment banks and other equity and non-equity based investment funds. The Company and its portfolio companies are subject to regulation by laws at the local, state, federal and foreign level, including with respect to securities laws, tax and accounting standards.
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