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.
Demandware's Sloan Ratio for the quarter that ended in Mar. 2016 was -11.89%.
As of Mar. 2016, Demandware has a Sloan Ratio of -11.89%, indicating there is a warning stage of accrual build up.
Demandware Sloan Ratio % Historical Data
The historical data trend for Demandware'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 Demandware's Sloan Ratio %
For the Software - Application subindustry, Demandware'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.
Demandware's Sloan Ratio % Distribution in the Software Industry
For the Software industry and Technology sector, Demandware's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where Demandware's Sloan Ratio % falls into.
Demandware 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.
Demandware's Sloan Ratio for the fiscal year that ended in Dec. 2015 is calculated as
Demandware's Net Income for the trailing twelve months (TTM) ended in Mar. 2016 was -20.021 (Jun. 2015 ) + -11.919 (Sep. 2015 ) + 0.525 (Dec. 2015 ) + -11.691 (Mar. 2016 ) = $-43.1 Mil.
Demandware's Cash Flow from Operations for the trailing twelve months (TTM) ended in Mar. 2016 was -0.192 (Jun. 2015 ) + -1.626 (Sep. 2015 ) + 14.749 (Dec. 2015 ) + 3.457 (Mar. 2016 ) = $16.4 Mil.
Demandware's Cash Flow from Investing for the trailing twelve months (TTM) ended in Mar. 2016 was 5.25 (Jun. 2015 ) + -12.058 (Sep. 2015 ) + -6.036 (Dec. 2015 ) + -2.408 (Mar. 2016 ) = $-15.3 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.
Demandware (NYSE:DWRE) 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. 2016, Demandware has a Sloan Ratio of -11.89%, indicating there is a warning stage of accrual build up.
Demandware Sloan Ratio % Related Terms
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Demandware Inc was incorporated in Delaware in February 2004 as SSE Holding, Inc. and changed its name to Demandware, Inc. in August 2004. The Company provides enterprise-class cloud-based digital commerce solutions for retailers and branded manufacturers. Its platform, Demandware Commerce, enables customers to establish and execute complex digital commerce strategies that include expansion, multi-brand rollouts and omni-channel operations. It enable companies to easily design, implement and manage their own customized digital commerce sites, including websites, mobile applications, in-store solutions and other digital storefronts. Through its scalable, secure, and open Demandware Commerce platform, its customers create seamless brand experiences to reach their consumers across all digital touch points globally. The Company's cloud infrastructure increases processing capacity of its customers' digital commerce sites to meet surges in demand, minimize page load times and maximize uptime. Its cloud platform also offers the high reliability and security required by customers to implement their digital commerce strategies, and the Company has achieved 99.99% average platform availability since 2005. The Company has built an ecosystem of trusted partners called Demandware LINK that complements and optimizes Demandware Commerce. Demandware LINK is comprised of technology, solution and end-to end partners. Its geographical areas of operations include, United States, Germany and United Kingdom. The Company's customers include adidas, Barneys New York, Bestseller, Brooks Brothers, Carter's, Deckers, Guthy-Renker, House of Fraser, Jewelry Television, Kate Spade, Lands' End, L'Oreal, mothercare, s.Oliver, and Tory Burch. The Company competes with IBM, Oracle/ATG, eBay/Magento, Digital River, eBay/GSI Commerce, MarketLive and Venda. Its solutions are subject to export controls, including the Commerce Department's Export Administration Regulations and various economic and trade sanctions regulations established by the Treasury Department's Office of Foreign Assets Controls, and exports of its solutions must be made in compliance with these laws.
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