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.
Rockwood Holdings's Sloan Ratio for the quarter that ended in Sep. 2014 was 9.59%.
As of Sep. 2014, Rockwood Holdings has a Sloan Ratio of 9.59%, indicating the company is in the safe zone and there is no funny business with accruals.
Rockwood Holdings Sloan Ratio % Historical Data
The historical data trend for Rockwood Holdings'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 Rockwood Holdings's Sloan Ratio %
For the Specialty Chemicals subindustry, Rockwood 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.
Rockwood Holdings's Sloan Ratio % Distribution in the Chemicals Industry
For the Chemicals industry and Basic Materials sector, Rockwood Holdings's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where Rockwood Holdings's Sloan Ratio % falls into.
Rockwood 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.
Rockwood Holdings's Sloan Ratio for the fiscal year that ended in Dec. 2013 is calculated as
Rockwood Holdings's Net Income for the trailing twelve months (TTM) ended in Sep. 2014 was 364.854 (Dec. 2013 ) + -15.038 (Mar. 2014 ) + 34.371 (Jun. 2014 ) + 66.658 (Sep. 2014 ) = €451 Mil.
Rockwood Holdings's Cash Flow from Operations for the trailing twelve months (TTM) ended in Sep. 2014 was 58.911 (Dec. 2013 ) + 14.821 (Mar. 2014 ) + 57.85 (Jun. 2014 ) + 94.129 (Sep. 2014 ) = €226 Mil.
Rockwood Holdings's Cash Flow from Investing for the trailing twelve months (TTM) ended in Sep. 2014 was 391.134 (Dec. 2013 ) + -29.715 (Mar. 2014 ) + -446.163 (Jun. 2014 ) + -68.21 (Sep. 2014 ) = €-153 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.
Rockwood Holdings (FRA:R6H) 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. 2014, Rockwood Holdings has a Sloan Ratio of 9.59%, indicating the company is in the safe zone and there is no funny business with accruals.
Rockwood Holdings Sloan Ratio % Related Terms
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Rockwood Holdings Inc was incorporated in Delaware in September 2000. It is a developer, manufacturer and marketer of value-added specialty chemicals and materials used for industrial and commercial purposes. The Company operates through two business segments: Lithium and Surface Treatment. The Lithium segment operates under the Rockwood Lithium brand name and develops lithium chemicals for industries and end markets. It develops and manufactures basic lithium compounds, including lithium carbonate, lithium hydroxide, lithium chloride, and value-added lithium specialties and reagents, including butyllithium and lithium aluminum hydride. It operates lithium business along the following five business divisions reflecting its core end-markets: Lithium Salts; Special Salts; Butyllithium/Lithium Metal; Battery Products and Lithium Specialties. Lithium segment obtains lithium brine which it uses to produce lithium products through evaporation in the Salar de Atacama, Chile and Silver Peak, Nevada. Lithium's customers include Bayer CropScience (a division of Bayer AG), Syngenta AG, Umicore S.A., Samsung SDI Co. Ltd. and Royal DSM N.V. Surface Treatment segment operates under the Chemetall brand name and develops and manufactures metal surface treatment products and services for industries and end market. Surface Treatment's products are used for a variety of applications and serve the automotive, aerospace and general industrial markets, including steel and metal-working industries. The customers include ArcelorMittal, Daimler AG, European Aeronautic Defence and Space Company (EADS) N.V., Ford, Renault-Nissan and Volkswagen AG. The competitors in this segment includes: Dow Corning Corporation, Catalise Industria e Comercio de Metals Ltda and Nachmann S.r.I. The Company's operations are subject to regulation by the FDA with respect to certain products produced, marketed and sold by its Lithium segment, which includes pharmaceutical intermediates.
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