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.
Federal-Mogul Holdings's Sloan Ratio for the quarter that ended in Sep. 2016 was -0.12%.
As of Sep. 2016, Federal-Mogul Holdings has a Sloan Ratio of -0.12%, indicating the company is in the safe zone and there is no funny business with accruals.
Federal-Mogul Holdings 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.
Competitive Comparison of Federal-Mogul Holdings's Sloan Ratio %
For the Auto Parts subindustry, Federal-Mogul Holdings'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.
Federal-Mogul Holdings's Sloan Ratio % Distribution in the Vehicles & Parts Industry
For the Vehicles & Parts industry and Consumer Cyclical sector, Federal-Mogul Holdings's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where Federal-Mogul Holdings's Sloan Ratio % falls into.
Federal-Mogul Holdings 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.
Federal-Mogul Holdings's Sloan Ratio for the fiscal year that ended in Dec. 2015 is calculated as
Federal-Mogul Holdings's Net Income for the trailing twelve months (TTM) ended in Sep. 2016 was -58 (Dec. 2015 ) + 35 (Mar. 2016 ) + 31 (Jun. 2016 ) + 15 (Sep. 2016 ) = $23 Mil.
Federal-Mogul Holdings's Cash Flow from Operations for the trailing twelve months (TTM) ended in Sep. 2016 was 63 (Dec. 2015 ) + 103 (Mar. 2016 ) + 189 (Jun. 2016 ) + 102 (Sep. 2016 ) = $457 Mil.
Federal-Mogul Holdings's Cash Flow from Investing for the trailing twelve months (TTM) ended in Sep. 2016 was -119 (Dec. 2015 ) + -105 (Mar. 2016 ) + -123 (Jun. 2016 ) + -78 (Sep. 2016 ) = $-425 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.
Federal-Mogul Holdings (NAS:FDML) 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. 2016, Federal-Mogul Holdings has a Sloan Ratio of -0.12%, indicating the company is in the safe zone and there is no funny business with accruals.
Federal-Mogul Holdings Sloan Ratio % Related Terms
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Federal-Mogul Holdings (Federal-Mogul Holdings) Business Description
Federal-Mogul Holdings Corp is supplier of technology and innovation in vehicle and industrial products for fuel economy, emissions reduction and safety systems. It supplies components, accessories and systems to the automotive, small engine, heavy-duty, marine, railroad, agricultural, off-road, aerospace and energy, industrial and transportation markets, including customers in both the original equipment manufacturers and services market and the replacement market. The Company operates in two segments, Powertrain and Motorparts. The Powertrain segment focuses on original equipment products for automotive, heavy duty and industrial applications. The Motorparts segment sells and distributes a broad portfolio of products in the aftermarket including more than 20 brands. It also serves original equipment manufacturers with products including braking, wipers, and a limited range of chassis. It has operations in markets including Canada, France, Germany, Italy, Japan, Spain, Sweden, the United Kingdom and the United States, and emerging markets including Argentina, Brazil, China, Czech Republic, Hungary, India, Korea, Mexico, Poland, Russia, South Africa, Thailand, Turkey and Venezuela. The Company's operations, consistent with those of the manufacturing sector in general, are subject to numerous existing and proposed laws and governmental regulations designed to protect the environment, particularly regarding plant wastes and emissions and solid waste disposal.
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