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.
EMC's Sloan Ratio for the quarter that ended in Jun. 2016 was -6.87%.
As of Jun. 2016, EMC has a Sloan Ratio of -6.87%, indicating the company is in the safe zone and there is no funny business with accruals.
EMC Sloan Ratio % Historical Data
The historical data trend for EMC'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.
For the Computer Hardware subindustry, EMC'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.
EMC's Sloan Ratio % Distribution in the Hardware Industry
For the Hardware industry and Technology sector, EMC's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where EMC's Sloan Ratio % falls into.
EMC 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.
EMC's Sloan Ratio for the fiscal year that ended in Dec. 2015 is calculated as
EMC's Net Income for the trailing twelve months (TTM) ended in Jun. 2016 was 480 (Sep. 2015 ) + 771 (Dec. 2015 ) + 268 (Mar. 2016 ) + 581 (Jun. 2016 ) = $2,100 Mil.
EMC's Cash Flow from Operations for the trailing twelve months (TTM) ended in Jun. 2016 was 1403 (Sep. 2015 ) + 1870 (Dec. 2015 ) + 932 (Mar. 2016 ) + 1608 (Jun. 2016 ) = $5,813 Mil.
EMC's Cash Flow from Investing for the trailing twelve months (TTM) ended in Jun. 2016 was -1595 (Sep. 2015 ) + 296 (Dec. 2015 ) + 156 (Mar. 2016 ) + 641 (Jun. 2016 ) = $-502 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.
EMC (NYSE:EMC) 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 Jun. 2016, EMC has a Sloan Ratio of -6.87%, indicating the company is in the safe zone and there is no funny business with accruals.
EMC Sloan Ratio % Related Terms
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EMC Corp is a Massachusetts corporation, incorporated in 1979. The Company together with its subsidiaries supports the businesses and service providers to transform information technology (IT) operations to an as a service model (ITaaS). The Company operates in three segments: EMC Information Infrastructure, Pivotal and VMware Virtual Infrastructure. The Company's information infrastructure provides a foundation for organizations to store, manage, protect, analyze and secure ever-increasing quantities of information, while at the same time improving business agility, lowering cost and increasing competitive advantage. VMware Virtual Infrastructure provides virtualization infrastructure solutions. Pivotal provides application and data infrastructure software, agile development services and data science consulting. The Company offers a comprehensive portfolio of enterprise storage systems and software - including high-end EMC VMAX and mid-tier EMC VNX unified storage and a portfolio of backup products that support enterprise application workloads. The Company's two additional storage families, EMC Isilon and EMC Atmos, are specifically designed to handle vast quantities of unstructured data. EMC supports a broad range of customers, including service providers, around the world - in every industry, in both public and private sectors, and of sizes ranging from the Fortune 500 to small business and individual consumers. The Company markets its products through direct sales and through multiple distribution channels. It has a direct sales presence throughout North America, Latin America, Europe, the Middle East, South Africa and the Asia Pacific region. The Company also has agreements in place with many partners, including value-added resellers and distributors, cloud service providers, systems integrators, outsourcers, Independent Software Vendors ("ISVs"), and Original Equipment Manufacturers ("OEMs"). The Company competes with many companies in the markets it serve, including companies that offer IT products and services and others that offer specific information storage, protection, security, management and intelligence, data analytics or virtualization products or services.
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