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.
CNH Industrial NV's Sloan Ratio for the quarter that ended in Dec. 2023 was 11.14%.
As of Dec. 2023, CNH Industrial NV has a Sloan Ratio of 11.14%, indicating there is a warning stage of accrual build up.
CNH Industrial NV Sloan Ratio % Historical Data
The historical data trend for CNH Industrial NV'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 CNH Industrial NV's Sloan Ratio %
For the Farm & Heavy Construction Machinery subindustry, CNH Industrial NV'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.
CNH Industrial NV's Sloan Ratio % Distribution in the Farm & Heavy Construction Machinery Industry
For the Farm & Heavy Construction Machinery industry and Industrials sector, CNH Industrial NV's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where CNH Industrial NV's Sloan Ratio % falls into.
CNH Industrial NV 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.
CNH Industrial NV's Sloan Ratio for the fiscal year that ended in Dec. 2023 is calculated as
CNH Industrial NV's Net Income for the trailing twelve months (TTM) ended in Dec. 2023 was 482 (Mar. 2023 ) + 706 (Jun. 2023 ) + 567 (Sep. 2023 ) + 616 (Dec. 2023 ) = $2,371 Mil.
CNH Industrial NV's Cash Flow from Operations for the trailing twelve months (TTM) ended in Dec. 2023 was -701 (Mar. 2023 ) + -139 (Jun. 2023 ) + 232 (Sep. 2023 ) + 1515 (Dec. 2023 ) = $907 Mil.
CNH Industrial NV's Cash Flow from Investing for the trailing twelve months (TTM) ended in Dec. 2023 was -749 (Mar. 2023 ) + -498 (Jun. 2023 ) + -795 (Sep. 2023 ) + -1657 (Dec. 2023 ) = $-3,699 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.
CNH Industrial NV (NYSE:CNHI) 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, CNH Industrial NV has a Sloan Ratio of 11.14%, indicating there is a warning stage of accrual build up.
CNH Industrial NV Sloan Ratio % Related Terms
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CNH Industrial NV (CNH Industrial NV) Business Description
CNH Industrial is a global manufacturer of heavy machinery, with a range of products including agricultural and construction equipment. One of its most recognizable brands, Case IH, has served farmers for generations. The company's products are available through a robust dealer network, which includes over 3,600 dealer and distribution locations globally. CNH's finance arm provides retail financing for equipment to its customers in addition to wholesale financing for dealers, which increases the likelihood of product sales.
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