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.
The RealReal's Sloan Ratio for the quarter that ended in Dec. 2023 was -14.56%.
As of Dec. 2023, The RealReal has a Sloan Ratio of -14.56%, indicating there is a warning stage of accrual build up.
The RealReal Sloan Ratio % Historical Data
The historical data trend for The RealReal'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 The RealReal's Sloan Ratio %
For the Luxury Goods subindustry, The RealReal'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.
The RealReal's Sloan Ratio % Distribution in the Retail - Cyclical Industry
For the Retail - Cyclical industry and Consumer Cyclical sector, The RealReal's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where The RealReal's Sloan Ratio % falls into.
The RealReal 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.
The RealReal's Sloan Ratio for the fiscal year that ended in Dec. 2023 is calculated as
The RealReal's Net Income for the trailing twelve months (TTM) ended in Dec. 2023 was -82.5 (Mar. 2023 ) + -41.33 (Jun. 2023 ) + -22.949 (Sep. 2023 ) + -21.693 (Dec. 2023 ) = $-168.5 Mil.
The RealReal's Cash Flow from Operations for the trailing twelve months (TTM) ended in Dec. 2023 was -30.433 (Mar. 2023 ) + -30.425 (Jun. 2023 ) + -10.933 (Sep. 2023 ) + 10.523 (Dec. 2023 ) = $-61.3 Mil.
The RealReal's Cash Flow from Investing for the trailing twelve months (TTM) ended in Dec. 2023 was -15.92 (Mar. 2023 ) + -11.358 (Jun. 2023 ) + -8.12 (Sep. 2023 ) + -6.73 (Dec. 2023 ) = $-42.1 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.
The RealReal (NAS:REAL) 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, The RealReal has a Sloan Ratio of -14.56%, indicating there is a warning stage of accrual build up.
The RealReal Sloan Ratio % Related Terms
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The RealReal is the largest luxury resale platform in the U.S., generating $1.8 billion in 2022 gross merchandise volume and addressing a niche (personal luxury resale) that had previously been serviced by inefficient upscale boutiques and local pawn shops. The firm generates revenue via consignment and first-party sales on its online marketplace, and through direct sales across its brick-and-mortar footprint. With a hands-on approach that actively sources inventory and authenticates every item on its platform, The RealReal is able to justify much higher take rates than peers, working out to roughly 35% of net merchandise value, which excludes returns, cancellations, and first-party sales.
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