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.
Reynolds American's Sloan Ratio for the quarter that ended in Mar. 2017 was 2.63%.
As of Mar. 2017, Reynolds American has a Sloan Ratio of 2.63%, indicating the company is in the safe zone and there is no funny business with accruals.
Reynolds American Sloan Ratio % Historical Data
The historical data trend for Reynolds American'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 Reynolds American's Sloan Ratio %
For the Tobacco subindustry, Reynolds American'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.
Reynolds American's Sloan Ratio % Distribution in the Tobacco Products Industry
For the Tobacco Products industry and Consumer Defensive sector, Reynolds American's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where Reynolds American's Sloan Ratio % falls into.
Reynolds American 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.
Reynolds American's Sloan Ratio for the fiscal year that ended in Dec. 2016 is calculated as
Reynolds American's Net Income for the trailing twelve months (TTM) ended in Mar. 2017 was 796 (Jun. 2016 ) + 861 (Sep. 2016 ) + 851 (Dec. 2016 ) + 780 (Mar. 2017 ) = $3,288 Mil.
Reynolds American's Cash Flow from Operations for the trailing twelve months (TTM) ended in Mar. 2017 was -1858 (Jun. 2016 ) + 1182 (Sep. 2016 ) + 823 (Dec. 2016 ) + 1861 (Mar. 2017 ) = $2,008 Mil.
Reynolds American's Cash Flow from Investing for the trailing twelve months (TTM) ended in Mar. 2017 was -28 (Jun. 2016 ) + -31 (Sep. 2016 ) + 6 (Dec. 2016 ) + -32 (Mar. 2017 ) = $-85 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.
Reynolds American (NYSE:RAI) 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. 2017, Reynolds American has a Sloan Ratio of 2.63%, indicating the company is in the safe zone and there is no funny business with accruals.
Reynolds American Sloan Ratio % Related Terms
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Reynolds American (Reynolds American) Business Description
Reynolds American controls roughly one third of the U.S. cigarette market and is the second-largest domestic cigarette manufacturer behind Altria. Its brands include Camel, Pall Mall, and Newport. Reynolds also owns the Grizzly and Kodiak smokeless tobacco brands. Another subsidiary, Santa Fe Natural Tobacco, manufactures superpremium Natural American Spirit cigarettes. In 2013, Reynolds entered the electronic cigarette market with its Vuse brand, which captured a significant share of this small but growing market.
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