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.
Yum Brands's Sloan Ratio for the quarter that ended in Dec. 2023 was 1.62%.
As of Dec. 2023, Yum Brands has a Sloan Ratio of 1.62%, indicating the company is in the safe zone and there is no funny business with accruals.
Yum Brands Sloan Ratio % Historical Data
The historical data trend for Yum Brands'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 Yum Brands's Sloan Ratio %
For the Restaurants subindustry, Yum Brands'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.
Yum Brands's Sloan Ratio % Distribution in the Restaurants Industry
For the Restaurants industry and Consumer Cyclical sector, Yum Brands's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where Yum Brands's Sloan Ratio % falls into.
Yum Brands 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.
Yum Brands's Sloan Ratio for the fiscal year that ended in Dec. 2023 is calculated as
Yum Brands's Net Income for the trailing twelve months (TTM) ended in Dec. 2023 was 300 (Mar. 2023 ) + 418 (Jun. 2023 ) + 416 (Sep. 2023 ) + 463 (Dec. 2023 ) = $1,597 Mil.
Yum Brands's Cash Flow from Operations for the trailing twelve months (TTM) ended in Dec. 2023 was 349 (Mar. 2023 ) + 329 (Jun. 2023 ) + 477 (Sep. 2023 ) + 448 (Dec. 2023 ) = $1,603 Mil.
Yum Brands's Cash Flow from Investing for the trailing twelve months (TTM) ended in Dec. 2023 was -56 (Mar. 2023 ) + 82 (Jun. 2023 ) + -30 (Sep. 2023 ) + -103 (Dec. 2023 ) = $-107 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.
Yum Brands (NYSE:YUM) 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, Yum Brands has a Sloan Ratio of 1.62%, indicating the company is in the safe zone and there is no funny business with accruals.
Yum Brands Sloan Ratio % Related Terms
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Yum Brands is a U.S.-based restaurant operator featuring a portfolio of four brands: KFC (27,760 global units at year-end 2022), Pizza Hut (19,034 units), Taco Bell (8,203 units), and The Habit Burger Grill (346 units). With $59 billion in 2022 systemwide sales, the firm is the second-largest restaurant company in the world behind McDonald's ($116 billion), ahead of Restaurant Brands International ($39 billion) and Starbucks ($27 billion). Yum is 98% franchised, with the largest franchisee, Yum China, spun out in 2016 (after which Yum China agreed to pay 3% royalties to Yum Brands in perpetuity). Yum is the newest evolution of Tricon, formerly a division of PepsiCo, and generates the bulk of its revenue from franchise royalties and marketing contributions.
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