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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 Dec. 2019, Management Consulting Group has a Sloan Ratio of -6.09%, indicating the company is in the safe zone and there is no funny business with accruals.
Management Consulting Group (LSE:MMC) 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. 2019, Management Consulting Group has a Sloan Ratio of -6.09%, indicating the company is in the safe zone and there is no funny business with accruals.
Management Consulting Group Sloan Ratio % Related Terms
Management Consulting Group 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.
LSE:MMC vs INFO, VRSK, EFX: Sloan Ratio % Comparison
For the Consulting Services subindustry, Management Consulting Group'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.
Management Consulting Group Sloan Ratio % vs Business Services Industry
For the Business Services industry and Industrials sector, Management Consulting Group's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where Management Consulting Group's Sloan Ratio % falls into.
Management Consulting Group 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.
For company reported semi-annually, GuruFocus uses latest two semi-annual data as the TTM data.
Management Consulting Group's Net Income for the trailing twelve months (TTM) ended in Dec. 2019 was -2.556 (Jun. 2019 ) + -3.506 (Dec. 2019 ) = £-6.06 Mil.
Management Consulting Group's Cash Flow from Operations for the trailing twelve months (TTM) ended in Dec. 2019 was -2.861 (Jun. 2019 ) + -2.723 (Dec. 2019 ) = £-5.58 Mil.
Management Consulting Group's Cash Flow from Investing for the trailing twelve months (TTM) ended in Dec. 2019 was 0.143 (Jun. 2019 ) + 0.555 (Dec. 2019 ) = £0.70 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.
Management Consulting Group (LSE:MMC) has a Sloan Ratio % of -6.09% as of Dec. 2019. Sloan ratio measures earnings quality based on the amount of accruals. View historical data on Management Consulting Group and its competitors.
Is Management Consulting Group's Sloan Ratio % too high?
Management Consulting Group's current Sloan Ratio % is -6.09%.
How does Management Consulting Group's Sloan Ratio % compare to INFO and VRSK?
Management Consulting Group's Sloan Ratio % of -6.09% can be compared against companies in the Business Services 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 a Business Services company?
A good Sloan Ratio % depends on the Business Services 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 Management Consulting Group and its competitors. Management Consulting Group's current Sloan Ratio % is -6.09%. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Management Consulting Group stock overvalued right now?
Based on GuruFocus' analysis, Management Consulting Group (LSE:MMC) is currently considered Possible Value Trap. The current Sloan Ratio % is -6.09%. 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 Management Consulting Group (LSE:MMC), the current Sloan Ratio % is -6.09% as of Dec. 2019. 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.
Management Consulting Group PLC is engaged in providing professional services to various industries and sectors via the Proudfoot practice. Proudfoot, which is a professional service practice designs, implements and accelerates the operational transformation that realizes tomorrow's results today. The company serves various industries including manufacturing, natural resources, consumer packaged goods, transportation, automotive, building materials and heavy industry. It also provides market-specific local customization for Financial Services and Healthcare sectors. The company provides its services in the Americas, Europe among other regions, and generates a vast majority of its revenue from Europe.
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