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.
Warner Music Group's Sloan Ratio for the quarter that ended in Dec. 2023 was 0.87%.
As of Dec. 2023, Warner Music Group has a Sloan Ratio of 0.87%, indicating the company is in the safe zone and there is no funny business with accruals.
Warner Music Group Sloan Ratio % Historical Data
The historical data trend for Warner Music Group'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 Warner Music Group's Sloan Ratio %
For the Entertainment subindustry, Warner Music 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.
Warner Music Group's Sloan Ratio % Distribution in the Media - Diversified Industry
For the Media - Diversified industry and Communication Services sector, Warner Music Group's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where Warner Music Group's Sloan Ratio % falls into.
Warner Music 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.
Warner Music Group's Sloan Ratio for the fiscal year that ended in Sep. 2023 is calculated as
Warner Music Group's Net Income for the trailing twelve months (TTM) ended in Dec. 2023 was 34 (Mar. 2023 ) + 122 (Jun. 2023 ) + 152 (Sep. 2023 ) + 159 (Dec. 2023 ) = $467 Mil.
Warner Music Group's Cash Flow from Operations for the trailing twelve months (TTM) ended in Dec. 2023 was -6 (Mar. 2023 ) + 146 (Jun. 2023 ) + 338 (Sep. 2023 ) + 293 (Dec. 2023 ) = $771 Mil.
Warner Music Group's Cash Flow from Investing for the trailing twelve months (TTM) ended in Dec. 2023 was -41 (Mar. 2023 ) + -53 (Jun. 2023 ) + -196 (Sep. 2023 ) + -92 (Dec. 2023 ) = $-382 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.
Warner Music Group (NAS:WMG) 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. 2023, Warner Music Group has a Sloan Ratio of 0.87%, indicating the company is in the safe zone and there is no funny business with accruals.
Warner Music Group Sloan Ratio % Related Terms
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Warner Music Group (Warner Music Group) Business Description
Warner Music Group is the third largest of the three major global record labels, with Vivendi's Universal Music in first and Sony Music in second. Warner's larger segment, recorded music, consists of iconic labels like Atlantic Records, Warner Records, and Parlophone Records and popular artists such as Ed Sheeran, Cardi B, Dua Lipa, and Blake Shelton. Warner Chappell, the firm's publishing arm, is the home to over 65,000 composers and songwriters with over 1 million copyrights represented. Warner is controlled by Access Industries, which owns an 84% economic interest and 99% of voting rights.
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