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.
Armstrong World Industries's Sloan Ratio for the quarter that ended in Dec. 2023 was 0.04%.
As of Dec. 2023, Armstrong World Industries has a Sloan Ratio of 0.04%, indicating the company is in the safe zone and there is no funny business with accruals.
Armstrong World Industries Sloan Ratio % Historical Data
The historical data trend for Armstrong World Industries'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 Armstrong World Industries's Sloan Ratio %
For the Building Products & Equipment subindustry, Armstrong World Industries'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.
Armstrong World Industries's Sloan Ratio % Distribution in the Construction Industry
For the Construction industry and Industrials sector, Armstrong World Industries's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where Armstrong World Industries's Sloan Ratio % falls into.
Armstrong World Industries 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.
Armstrong World Industries's Sloan Ratio for the fiscal year that ended in Dec. 2023 is calculated as
Armstrong World Industries's Net Income for the trailing twelve months (TTM) ended in Dec. 2023 was 47.3 (Mar. 2023 ) + 60.2 (Jun. 2023 ) + 69.5 (Sep. 2023 ) + 46.8 (Dec. 2023 ) = $224 Mil.
Armstrong World Industries's Cash Flow from Operations for the trailing twelve months (TTM) ended in Dec. 2023 was 26.2 (Mar. 2023 ) + 67.7 (Jun. 2023 ) + 82.5 (Sep. 2023 ) + 57.1 (Dec. 2023 ) = $234 Mil.
Armstrong World Industries's Cash Flow from Investing for the trailing twelve months (TTM) ended in Dec. 2023 was -1.5 (Mar. 2023 ) + -4.5 (Jun. 2023 ) + -4.6 (Sep. 2023 ) + 0.2 (Dec. 2023 ) = $-10 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.
Armstrong World Industries (NYSE:AWI) 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 Dec. 2023, Armstrong World Industries has a Sloan Ratio of 0.04%, indicating the company is in the safe zone and there is no funny business with accruals.
Armstrong World Industries Sloan Ratio % Related Terms
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Armstrong World Industries (Armstrong World Industries) Business Description
Armstrong World Industries Inc is engaged in the design, innovation and manufacture of ceiling and wall solutions in the Americas. The products include mineral fiber, fiberglass wool, metal, wood, wood fiber, glass-reinforced-gypsum and felt. The company also manufactures ceiling suspension system (grid) products through a joint venture with Worthington Industries, Inc. called Worthington Armstrong Venture (WAVE).
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