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.
E*TRADE Financial's Sloan Ratio for the quarter that ended in Jun. 2020 was 1.14%.
As of Jun. 2020, E*TRADE Financial has a Sloan Ratio of 1.14%, indicating the company is in the safe zone and there is no funny business with accruals.
E*TRADE Financial Sloan Ratio % Historical Data
The historical data trend for E*TRADE Financial'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 E*TRADE Financial's Sloan Ratio %
For the Capital Markets subindustry, E*TRADE Financial'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.
E*TRADE Financial's Sloan Ratio % Distribution in the Capital Markets Industry
For the Capital Markets industry and Financial Services sector, E*TRADE Financial's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where E*TRADE Financial's Sloan Ratio % falls into.
E*TRADE Financial 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.
E*TRADE Financial's Sloan Ratio for the fiscal year that ended in Dec. 2019 is calculated as
E*TRADE Financial's Net Income for the trailing twelve months (TTM) ended in Jun. 2020 was 274 (Sep. 2019 ) + 172 (Dec. 2019 ) + 181 (Mar. 2020 ) + 196 (Jun. 2020 ) = $823 Mil.
E*TRADE Financial's Cash Flow from Operations for the trailing twelve months (TTM) ended in Jun. 2020 was 743 (Sep. 2019 ) + 1878 (Dec. 2019 ) + 4821 (Mar. 2020 ) + -1077 (Jun. 2020 ) = $6,365 Mil.
E*TRADE Financial's Cash Flow from Investing for the trailing twelve months (TTM) ended in Jun. 2020 was 617 (Sep. 2019 ) + 879 (Dec. 2019 ) + -3997 (Mar. 2020 ) + -3841 (Jun. 2020 ) = $-6,342 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.
E*TRADE Financial (LTS:0IEO) 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 Jun. 2020, E*TRADE Financial has a Sloan Ratio of 1.14%, indicating the company is in the safe zone and there is no funny business with accruals.
E*TRADE Financial Sloan Ratio % Related Terms
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E-Trade is one of the largest direct-to-investor platforms in the United States and housed over $500 billion of invested assets and client cash at the end of 2019. The company generates interest income on noninvested cash on its platform, trading commissions, service charges including payment for order flow, and fees from stock plan administration. Almost all the company's revenue is generated within the U.S.
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