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.
Berkshire Hathaway's Sloan Ratio for the quarter that ended in Dec. 2023 was 7.45%.
As of Dec. 2023, Berkshire Hathaway has a Sloan Ratio of 7.45%, indicating the company is in the safe zone and there is no funny business with accruals.
Berkshire Hathaway Sloan Ratio % Historical Data
The historical data trend for Berkshire Hathaway'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 Berkshire Hathaway's Sloan Ratio %
For the Insurance - Diversified subindustry, Berkshire Hathaway'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.
Berkshire Hathaway's Sloan Ratio % Distribution in the Insurance Industry
For the Insurance industry and Financial Services sector, Berkshire Hathaway's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where Berkshire Hathaway's Sloan Ratio % falls into.
Berkshire Hathaway 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.
Berkshire Hathaway's Sloan Ratio for the fiscal year that ended in Dec. 2023 is calculated as
Berkshire Hathaway's Net Income for the trailing twelve months (TTM) ended in Dec. 2023 was 35504 (Mar. 2023 ) + 35912 (Jun. 2023 ) + -12767 (Sep. 2023 ) + 37574 (Dec. 2023 ) = $96,223 Mil.
Berkshire Hathaway's Cash Flow from Operations for the trailing twelve months (TTM) ended in Dec. 2023 was 8693 (Mar. 2023 ) + 12434 (Jun. 2023 ) + 13669 (Sep. 2023 ) + 14400 (Dec. 2023 ) = $49,196 Mil.
Berkshire Hathaway's Cash Flow from Investing for the trailing twelve months (TTM) ended in Dec. 2023 was -7919 (Mar. 2023 ) + 10655 (Jun. 2023 ) + -28048 (Sep. 2023 ) + -7351 (Dec. 2023 ) = $-32,663 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.
Berkshire Hathaway (NYSE:BRK.B) 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, Berkshire Hathaway has a Sloan Ratio of 7.45%, indicating the company is in the safe zone and there is no funny business with accruals.
Berkshire Hathaway Sloan Ratio % Related Terms
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Berkshire Hathaway (Berkshire Hathaway) Business Description
Berkshire Hathaway is a holding company with a wide array of subsidiaries engaged in diverse activities. The firm's core business segment is insurance, run primarily through Geico, Berkshire Hathaway Reinsurance Group, and Berkshire Hathaway Primary Group. Berkshire has used the excess cash thrown off from these and its other operations over the years to acquire Burlington Northern Santa Fe (railroad), Berkshire Hathaway Energy (utilities and energy distributors), and the firms that make up its manufacturing, service, and retailing operations (which include five of Berkshire's largest noninsurance pretax earnings generators: Precision Castparts, Lubrizol, Clayton Homes, Marmon, and IMC/ISCAR). The conglomerate is unique in that it is run on a completely decentralized basis.
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