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.
Lonrho's Sloan Ratio for the quarter that ended in Dec. 2012 was 10.87%.
As of Dec. 2012, Lonrho has a Sloan Ratio of 10.87%, indicating there is a warning stage of accrual build up.
Lonrho Sloan Ratio % Historical Data
The historical data trend for Lonrho'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.
For the Conglomerates subindustry, Lonrho'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.
Lonrho's Sloan Ratio % Distribution in the Conglomerates Industry
For the Conglomerates industry and Industrials sector, Lonrho's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where Lonrho's Sloan Ratio % falls into.
Lonrho 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.
Lonrho's Sloan Ratio for the fiscal year that ended in Dec. 2012 is calculated as
For company reported semi-annually, GuruFocus uses latest two semi-annual data as the TTM data.
Lonrho's Net Income for the trailing twelve months (TTM) ended in Dec. 2012 was 25.7 (Jun. 2012 ) + -27.4 (Dec. 2012 ) = £-1.7 Mil.
Lonrho's Cash Flow from Operations for the trailing twelve months (TTM) ended in Dec. 2012 was -14 (Jun. 2012 ) + -19.1 (Dec. 2012 ) = £-33.1 Mil.
Lonrho's Cash Flow from Investing for the trailing twelve months (TTM) ended in Dec. 2012 was -2.5 (Jun. 2012 ) + -1.8 (Dec. 2012 ) = £-4.3 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.
Lonrho (LSE:LONR) 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. 2012, Lonrho has a Sloan Ratio of 10.87%, indicating there is a warning stage of accrual build up.
Lonrho Sloan Ratio % Related Terms
Thank you for viewing the detailed overview of Lonrho's Sloan Ratio % provided by GuruFocus.com. Please click on the following links to see related term pages.
Lonrho PLC is engaged in providing the infrastructure and services required for the growing oil, mineral and agricultural sectors in Africa. The Company has a diverse portfolio of investments across Sub-Saharan Africa in four core operating sectors: Agribusiness, Infrastructure, Hotels and Support Services. Agribusiness vertically integrates the production, sourcing, logistics, processing and distribution of agricultural products from Sub-Saharan Africa to the consumer. The division supplies to its retailers in Sub-Saharan Africa, Europe, the USA, Middle East, Scandinavia and the Far East. The division also distributes agricultural and heavy machinery. Infrastructure division develops and manages oil logistics terminals. Luba Freeport, the oil service terminal in the Gulf of Guinea, has attracted oil service companies to be long term tenants at the port to service offshore exploration and production rigs. The Company's Hotel division includes hotels centred on the commercial, conference and business related markets across the Continent. It owns or manages hotels in Lubumbashi and Kinshasa in the Democratic Republic of the Congo, Maputo in Mozambique, Gaborone in Botswana and Mutare in Zimbabwe. IT business is a full systems integrator and manager that designs, builds, develops and integrates IT solutions for large corporate clients, banks and governments and then undertakes management contracts to run and manage installations. The IT division is a distributor for Cisco, Microsoft, Dell and Hewlett Packard systems and equipment.
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