Switch to:
GuruFocus has detected 2 Warning Signs with Village Super Market Inc \$VLGEA.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.
Village Super Market Inc (NAS:VLGEA)
Sloan Ratio
0.35% (As of Oct. 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.

Village Super Market Inc's Sloan Ratio for the quarter that ended in Oct. 2016 was 0.35%.

As of Oct. 2016, Village Super Market Inc has a Sloan Ratio of 0.35%, 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.

Village Super Market Inc's Sloan Ratio for the fiscal year that ended in Jul. 2016 is calculated as

 Sloan Ratio = (Net Income (A: Jul. 2016 ) - Cash Flow from Operations (A: Jul. 2016 ) - Cash Flow from Investing (A: Jul. 2016 )) / Total Assets (A: Jul. 2016 ) = (25.044 - 64.101 - -20.366) / 450.254 = -4.15%

Village Super Market Inc's Sloan Ratio for the quarter that ended in Oct. 2016 is calculated as

 Sloan Ratio = (Net Income (TTM) - Cash Flow from Operations (TTM}) - Cash Flow from Investing (TTM)) / Total Assets (Q: Oct. 2016 ) = (24.723 - 46.369 - -23.192) / 443.247 = 0.35%

Village Super Market Inc's Net Income for the trailing twelve months (TTM) ended in Oct. 2016 was 6.284 (Jan. 2016 ) + 5.882 (Apr. 2016 ) + 8.448 (Jul. 2016 ) + 4.109 (Oct. 2016 ) = \$25 Mil.
Village Super Market Inc's Cash Flow from Operations for the trailing twelve months (TTM) ended in Oct. 2016 was 33.326 (Jan. 2016 ) + 7.94 (Apr. 2016 ) + 17.42 (Jul. 2016 ) + -12.317 (Oct. 2016 ) = \$46 Mil.
Village Super Market Inc's Cash Flow from Investing for the trailing twelve months (TTM) ended in Oct. 2016 was -5.652 (Jan. 2016 ) + -3.67 (Apr. 2016 ) + -6.616 (Jul. 2016 ) + -7.254 (Oct. 2016 ) = \$-23 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 Oct. 2016, Village Super Market Inc has a Sloan Ratio of 0.35%, indicating the company is in the safe zone and there is no funny business with accruals.

Related Terms

Historical Data

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

Village Super Market Inc Annual Data

 Jul07 Jul08 Jul09 Jul10 Jul11 Jul12 Jul13 Jul14 Jul15 Jul16 sloanratio (%) 10.44 2.45 2.23 -1.17 -5.67 2.51 -0.95 4.61 8.68 -4.15

Village Super Market Inc Quarterly Data

 Jul14 Oct14 Jan15 Apr15 Jul15 Oct15 Jan16 Apr16 Jul16 Oct16 sloanratio (%) 4.61 3.86 2.52 7.68 8.68 7.44 7.66 -3.00 -4.15 0.35
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)