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.
As of Dec. 2023, American Financial Group has a Sloan Ratio of -5.14%, indicating the company is in the safe zone and there is no funny business with accruals.
American Financial Group 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 American Financial Group's Sloan Ratio %
For the Insurance - Property & Casualty subindustry, American Financial 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.
American Financial Group's Sloan Ratio % Distribution in the Insurance Industry
For the Insurance industry and Financial Services sector, American Financial Group's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where American Financial Group's Sloan Ratio % falls into.
American Financial 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.
American Financial Group's Sloan Ratio for the fiscal year that ended in Dec. 2023 is calculated as
American Financial Group's Net Income for the trailing twelve months (TTM) ended in Dec. 2023 was 212 (Mar. 2023 ) + 200 (Jun. 2023 ) + 177 (Sep. 2023 ) + 263 (Dec. 2023 ) = $852 Mil.
American Financial Group's Cash Flow from Operations for the trailing twelve months (TTM) ended in Dec. 2023 was 403 (Mar. 2023 ) + 115 (Jun. 2023 ) + 696 (Sep. 2023 ) + 756 (Dec. 2023 ) = $1,970 Mil.
American Financial Group's Cash Flow from Investing for the trailing twelve months (TTM) ended in Dec. 2023 was 73 (Mar. 2023 ) + 295 (Jun. 2023 ) + 91 (Sep. 2023 ) + -45 (Dec. 2023 ) = $414 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.
American Financial Group (NYSE:AFG) 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, American Financial Group has a Sloan Ratio of -5.14%, indicating the company is in the safe zone and there is no funny business with accruals.
American Financial Group Sloan Ratio % Related Terms
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American Financial Group (American Financial Group) Business Description
American Financial Group Inc is a holding company that is engaged primarily in property and casualty insurance services. The company has a focus on specialized commercial products for businesses. American also has annuity operations that are focused on sales of traditional fixed and fixed-indexed annuities in the education, bank, and individual markets. American's insurance operations are conducted through the Great American Insurance Group. The group writes business in all 50 of the United States, primarily through independent agents and brokers.
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