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.
Coventry Health Care,'s Sloan Ratio for the quarter that ended in Mar. 2013 was 3.80%.
As of Mar. 2013, Coventry Health Care, has a Sloan Ratio of 3.80%, indicating the company is in the safe zone and there is no funny business with accruals.
Coventry Health Care, Sloan Ratio % Historical Data
The historical data trend for Coventry Health Care,'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 Coventry Health Care,'s Sloan Ratio %
For the Healthcare Plans subindustry, Coventry Health Care,'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.
Coventry Health Care,'s Sloan Ratio % Distribution in the Healthcare Plans Industry
For the Healthcare Plans industry and Healthcare sector, Coventry Health Care,'s Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where Coventry Health Care,'s Sloan Ratio % falls into.
Coventry Health Care, 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.
Coventry Health Care,'s Sloan Ratio for the fiscal year that ended in Dec. 2012 is calculated as
Coventry Health Care,'s Net Income for the trailing twelve months (TTM) ended in Mar. 2013 was 73.119 (Jun. 2012 ) + 81.681 (Sep. 2012 ) + 90.938 (Dec. 2012 ) + 104.505 (Mar. 2013 ) = €350 Mil.
Coventry Health Care,'s Cash Flow from Operations for the trailing twelve months (TTM) ended in Mar. 2013 was 48.636 (Jun. 2012 ) + -201.984 (Sep. 2012 ) + 190.038 (Dec. 2012 ) + 171.558 (Mar. 2013 ) = €208 Mil.
Coventry Health Care,'s Cash Flow from Investing for the trailing twelve months (TTM) ended in Mar. 2013 was 2.185 (Jun. 2012 ) + 7.987 (Sep. 2012 ) + -71.356 (Dec. 2012 ) + -59.592 (Mar. 2013 ) = €-121 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.
Coventry Health Care, (FRA:HCA) 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 Mar. 2013, Coventry Health Care, has a Sloan Ratio of 3.80%, indicating the company is in the safe zone and there is no funny business with accruals.
Coventry Health Care, Sloan Ratio % Related Terms
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Coventry Health Care, (FRA:HCA) Business Description
Coventry Health Care, Inc. was incorporated under the laws of the State of Delaware on December 17, 1997 and is the successor to Coventry Corporation, which was incorporated on November 21, 1986. The Company provides risk and fee-based managed care products and services to a cross section of individuals, employer and government-funded groups, government agencies, and other insurance carriers and administrators. Its operations are segmented into three - Commercial Products, Government Programs and Workers' Compensation. The Commercial Products segment provides health plan commercial risk, commercial management services, Medicare Advantage Coordinated Care Plans, and Medicaid products. Its health plans offer commercial risk products, including health maintenance organization, preferred provider organization, and point of service products to individuals and employer groups. This segment also provides health insurance benefits under the Federal Employees Health Benefits Program; and administrative services only products, such as medical claims administration, pharmacy benefits management, and utilization management and quality assurance programs. In addition, it offers consumer-directed benefit options comprising health reimbursement and savings accounts to commercial customers; provider network rental services through a PPO network to national, regional, and local third-party administrators, as well as insurance carriers; and coordination of mental health and substance abuse treatment services. The Government Programs segment offers Medicare Part D program that provides access to prescription drug coverage for eligible beneficiaries; and comprehensive health benefits on a risk basis to members participating in the Medicare Advantage CCP and Medicaid programs. Its Workers Compensation segment offers fee-based managed care services, such as provider network access, bill review, pharmacy benefit management, durable medical equipment and ancillary services, and care management services to underwriters and administrators of workers compensation insurance. The company serves individuals, employer and government-funded groups, government agencies, and other insurance carriers and administrators through direct sales staff, and independent insurance brokers and agents.
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