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 Express Co's Sloan Ratio for the quarter that ended in Mar. 2024 was 3.97%.
As of Mar. 2024, American Express Co has a Sloan Ratio of 3.97%, indicating the company is in the safe zone and there is no funny business with accruals.
American Express Co Sloan Ratio % Historical Data
The historical data trend for American Express Co'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 Express Co's Sloan Ratio %
For the Credit Services subindustry, American Express Co'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 Express Co's Sloan Ratio % Distribution in the Credit Services Industry
For the Credit Services industry and Financial Services sector, American Express Co's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where American Express Co's Sloan Ratio % falls into.
American Express Co 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 Express Co's Sloan Ratio for the fiscal year that ended in Dec. 2023 is calculated as
American Express Co's Net Income for the trailing twelve months (TTM) ended in Mar. 2024 was 2174 (Jun. 2023 ) + 2451 (Sep. 2023 ) + 1933 (Dec. 2023 ) + 2437 (Mar. 2024 ) = $8,995 Mil.
American Express Co's Cash Flow from Operations for the trailing twelve months (TTM) ended in Mar. 2024 was 3923 (Jun. 2023 ) + 8244 (Sep. 2023 ) + 6769 (Dec. 2023 ) + 5552 (Mar. 2024 ) = $24,488 Mil.
American Express Co's Cash Flow from Investing for the trailing twelve months (TTM) ended in Mar. 2024 was -7931 (Jun. 2023 ) + -6929 (Sep. 2023 ) + -8169 (Dec. 2023 ) + -3144 (Mar. 2024 ) = $-26,173 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 Express Co (NYSE:AXP) 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. 2024, American Express Co has a Sloan Ratio of 3.97%, indicating the company is in the safe zone and there is no funny business with accruals.
American Express Co Sloan Ratio % Related Terms
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American Express Co (American Express Co) Business Description
American Express is a global financial institution, operating in about 130 countries, that provides consumers and businesses charge and credit card payment products. The company also operates a highly profitable merchant payment network. Since 2018, it has operated in three segments: global consumer services, global commercial services, and global merchant and network services. In addition to payment products, the company's commercial business offers expense management tools, consulting services, and business loans.
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