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.
Johnson & Johnson's Sloan Ratio for the quarter that ended in Dec. 2023 was 6.85%.
As of Dec. 2023, Johnson & Johnson has a Sloan Ratio of 6.85%, indicating the company is in the safe zone and there is no funny business with accruals.
Johnson & Johnson Sloan Ratio % Historical Data
The historical data trend for Johnson & Johnson'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 Johnson & Johnson's Sloan Ratio %
For the Drug Manufacturers - General subindustry, Johnson & Johnson'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.
Johnson & Johnson's Sloan Ratio % Distribution in the Drug Manufacturers Industry
For the Drug Manufacturers industry and Healthcare sector, Johnson & Johnson's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where Johnson & Johnson's Sloan Ratio % falls into.
Johnson & Johnson 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.
Johnson & Johnson's Sloan Ratio for the fiscal year that ended in Dec. 2023 is calculated as
Johnson & Johnson's Net Income for the trailing twelve months (TTM) ended in Dec. 2023 was -68 (Mar. 2023 ) + 5144 (Jun. 2023 ) + 26028 (Sep. 2023 ) + 4049 (Dec. 2023 ) = $35,153 Mil.
Johnson & Johnson's Cash Flow from Operations for the trailing twelve months (TTM) ended in Dec. 2023 was 3257 (Mar. 2023 ) + 4182 (Jun. 2023 ) + 7489 (Sep. 2023 ) + 7863 (Dec. 2023 ) = $22,791 Mil.
Johnson & Johnson's Cash Flow from Investing for the trailing twelve months (TTM) ended in Dec. 2023 was 3315 (Mar. 2023 ) + -3776 (Jun. 2023 ) + 2541 (Sep. 2023 ) + -1202 (Dec. 2023 ) = $878 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.
Johnson & Johnson (NYSE:JNJ) 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, Johnson & Johnson has a Sloan Ratio of 6.85%, indicating the company is in the safe zone and there is no funny business with accruals.
Johnson & Johnson Sloan Ratio % Related Terms
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Johnson & Johnson (Johnson & Johnson) Business Description
Johnson & Johnson is the world's largest and most diverse healthcare firm. Three divisions make up the firm: pharmaceutical, medical devices and diagnostics, and consumer. The drug and device groups represent close to 80% of sales and drive the majority of cash flows for the firm. The drug division focuses on the following therapeutic areas: immunology, oncology, neurology, pulmonary, cardiology, and metabolic diseases. The device segment focuses on orthopedics, surgery tools, vision care, and a few smaller areas. The last segment of consumer focuses on baby care, beauty, oral care, over-the-counter drugs, and women's health. The consumer group is being divested in 2023 under the new name Kenvue. Geographically, just over half of total revenue is generated in the United States.
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