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.
FAT Brands's Sloan Ratio for the quarter that ended in Sep. 2024 was -1.41%.
As of Sep. 2024, FAT Brands has a Sloan Ratio of -1.41%, indicating the company is in the safe zone and there is no funny business with accruals.
FAT Brands Sloan Ratio % Historical Data
The historical data trend for FAT Brands'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 FAT Brands's Sloan Ratio %
For the Restaurants subindustry, FAT Brands'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.
FAT Brands's Sloan Ratio % Distribution in the Restaurants Industry
For the Restaurants industry and Consumer Cyclical sector, FAT Brands's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where FAT Brands's Sloan Ratio % falls into.
FAT Brands 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.
FAT Brands's Sloan Ratio for the fiscal year that ended in Dec. 2023 is calculated as
FAT Brands's Net Income for the trailing twelve months (TTM) ended in Sep. 2024 was -26.237 (Dec. 2023 ) + -38.316 (Mar. 2024 ) + -39.359 (Jun. 2024 ) + -44.755 (Sep. 2024 ) = $-148.7 Mil.
FAT Brands's Cash Flow from Operations for the trailing twelve months (TTM) ended in Sep. 2024 was -12.572 (Dec. 2023 ) + -28.401 (Mar. 2024 ) + -14.214 (Jun. 2024 ) + -3.221 (Sep. 2024 ) = $-58.4 Mil.
FAT Brands's Cash Flow from Investing for the trailing twelve months (TTM) ended in Sep. 2024 was -45.456 (Dec. 2023 ) + -8.046 (Mar. 2024 ) + -10.13 (Jun. 2024 ) + -7.787 (Sep. 2024 ) = $-71.4 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.
FAT Brands (NAS:FAT) 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. 2024, FAT Brands has a Sloan Ratio of -1.41%, indicating the company is in the safe zone and there is no funny business with accruals.
FAT Brands Sloan Ratio % Related Terms
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FAT Brands Inc is a multi-brand restaurant franchising company. It develops, markets, acquires and manages quick service, fast casual, casual dining, and polished casual dining restaurant concepts around the world. The company operates as a franchisor of restaurants, where the company generally does not own or operate the restaurant locations but rather generates revenue by charging franchisees an initial franchise fee as well as ongoing royalties. For some of the company's brands, it also directly owns and operates restaurant locations. Its brands include Round Table Pizza, Fatburger, Johnny Rockets, Twin Peaks, and Elevation Burger among others. Geographically, the majority of the revenue for the company is generated from the United States and the rest from other countries.
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