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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.
As of Sep. 2012, American Defense Systems has a Sloan Ratio of 0.00%, indicating the company is in the safe zone and there is no funny business with accruals.
American Defense Systems (OTCPK:ADFS) 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 Sep. 2012, American Defense Systems has a Sloan Ratio of 0.00%, indicating the company is in the safe zone and there is no funny business with accruals.
American Defense Systems Sloan Ratio % Related Terms
American Defense Systems Sloan Ratio % Historical Data
* 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.
ADFS vs ASDN, MKRS, PSSR: Sloan Ratio % Comparison
For the Aerospace & Defense subindustry, American Defense Systems'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.
American Defense Systems Sloan Ratio % vs Aerospace & Defense Industry
For the Aerospace & Defense industry and Industrials sector, American Defense Systems's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where American Defense Systems's Sloan Ratio % falls into.
American Defense Systems 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.
American Defense Systems's Sloan Ratio for the fiscal year that ended in Dec. 2011 is calculated as
American Defense Systems's Net Income for the trailing twelve months (TTM) ended in Sep. 2012 was 0.734 (Dec. 2011 ) + -0.395 (Mar. 2012 ) + -0.13 (Jun. 2012 ) + -0.077 (Sep. 2012 ) = $0.13 Mil.
American Defense Systems's Cash Flow from Operations for the trailing twelve months (TTM) ended in Sep. 2012 was 0.025 (Dec. 2011 ) + -0.076 (Mar. 2012 ) + 0.021 (Jun. 2012 ) + 0.012 (Sep. 2012 ) = $-0.02 Mil.
American Defense Systems's Cash Flow from Investing for the trailing twelve months (TTM) ended in Sep. 2012 was 0.007 (Dec. 2011 ) + 0 (Mar. 2012 ) + 0.062 (Jun. 2012 ) + 0 (Sep. 2012 ) = $0.07 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.
American Defense Systems (ADFS) has a Sloan Ratio % of 0.00% as of Sep. 2012. Sloan ratio measures earnings quality based on the amount of accruals. View historical data on American Defense Systems and its competitors.
Is American Defense Systems' Sloan Ratio % too high?
American Defense Systems' current Sloan Ratio % is 0.00%.
How does American Defense Systems' Sloan Ratio % compare to ASDN and MKRS?
American Defense Systems' Sloan Ratio % of 0.00% can be compared against companies in the Aerospace & Defense industry. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good Sloan Ratio % for an Aerospace & Defense company?
A good Sloan Ratio % depends on the Aerospace & Defense industry context. However, Sloan Ratio % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high Sloan Ratio % mean?
A high Sloan Ratio % can signal that a stock is expensive relative to its fundamentals. Sloan ratio measures earnings quality based on the amount of accruals. View historical data on American Defense Systems and its competitors. American Defense Systems's current Sloan Ratio % is 0.00%. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is American Defense Systems stock overvalued right now?
American Defense Systems (ADFS) has a current Sloan Ratio % of 0.00%. The current Sloan Ratio % is 0.00%. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is Sloan Ratio % calculated?
Sloan Ratio % is calculated from a company's financial statements. For American Defense Systems (ADFS), the current Sloan Ratio % is 0.00% as of Sep. 2012. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
American Defense Systems Inc is a defense and security products company engaged in three business areas: customized transparent and opaque armor solutions; architectural hardening and perimeter defense and tactical training products and services. It serves US government agencies, general contractors and other commercial and private entities operating in high-threat locations.
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