Switch to:
GuruFocus has detected 6 Warning Signs with LVMH Moet Hennessy Louis Vuitton SE $LVMUY.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.
LVMH Moet Hennessy Louis Vuitton SE (OTCPK:LVMUY)
Sloan Ratio %
1.33% (As of Jun. 2016)

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.

LVMH Moet Hennessy Louis Vuitton SE's Sloan Ratio for the quarter that ended in Jun. 2016 was 1.33%.

As of Jun. 2016, LVMH Moet Hennessy Louis Vuitton SE has a Sloan Ratio of 1.33%, indicating the company is in the safe zone and there is no funny business with accruals.


Definition

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.

LVMH Moet Hennessy Louis Vuitton SE's Sloan Ratio for the fiscal year that ended in Dec. 2015 is calculated as

Sloan Ratio=(Net Income (A: Dec. 2015 )-Cash Flow from Operations (A: Dec. 2015 )
-Cash Flow from Investing (A: Dec. 2015 ))/Total Assets (A: Dec. 2015 )
=(3892.15686275-4007.62527233
--556.644880174)/62746.1873638
=0.70%

LVMH Moet Hennessy Louis Vuitton SE's Sloan Ratio for the quarter that ended in Jun. 2016 is calculated as

Sloan Ratio=(Net Income (TTM)-Cash Flow from Operations (TTM})
-Cash Flow from Investing (TTM))/Total Assets (Q: Jun. 2016 )
=(4093.49587525-4124.1193606
--891.921862378)/64969.6629213
=1.33%

For company reported semi-annually, GuruFocus uses latest two semi-annual data as the TTM data. LVMH Moet Hennessy Louis Vuitton SE's Net Income for the trailing twelve months (TTM) ended in Jun. 2016 was 2171.02396514 (Dec. 2015 ) + 1922.47191011 (Jun. 2016 ) = $4,093 Mil.
LVMH Moet Hennessy Louis Vuitton SE's Cash Flow from Operations for the trailing twelve months (TTM) ended in Jun. 2016 was 3269.06318083 (Dec. 2015 ) + 855.056179775 (Jun. 2016 ) = $4,124 Mil.
LVMH Moet Hennessy Louis Vuitton SE's Cash Flow from Investing for the trailing twelve months (TTM) ended in Jun. 2016 was -542.483660131 (Dec. 2015 ) + -349.438202247 (Jun. 2016 ) = $-892 Mil.

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.


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.

According to How to Beat the Market with the Sloan Ratio:

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 Jun. 2016, LVMH Moet Hennessy Louis Vuitton SE has a Sloan Ratio of 1.33%, indicating the company is in the safe zone and there is no funny business with accruals.


Related Terms

Net Income, Cash Flow from Operations, Cash Flow from Investing, Total Assets


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

LVMH Moet Hennessy Louis Vuitton SE Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
sloanratio (%) 2.063.855.080.284.504.612.014.705.710.70

LVMH Moet Hennessy Louis Vuitton SE Semi-Annual Data

Dec11Jun12Dec12Jun13Dec13Jun14Dec14Jun15Dec15Jun16
sloanratio (%) 4.805.311.892.084.615.066.004.700.751.33
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
FEEDBACK