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.
Parker Hannifin's Sloan Ratio for the quarter that ended in Dec. 2023 was -1.14%.
As of Dec. 2023, Parker Hannifin has a Sloan Ratio of -1.14%, indicating the company is in the safe zone and there is no funny business with accruals.
Parker Hannifin Sloan Ratio % Historical Data
The historical data trend for Parker Hannifin'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 Parker Hannifin's Sloan Ratio %
For the Specialty Industrial Machinery subindustry, Parker Hannifin'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.
Parker Hannifin's Sloan Ratio % Distribution in the Industrial Products Industry
For the Industrial Products industry and Industrials sector, Parker Hannifin's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where Parker Hannifin's Sloan Ratio % falls into.
Parker Hannifin 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.
Parker Hannifin's Sloan Ratio for the fiscal year that ended in Jun. 2023 is calculated as
Parker Hannifin's Net Income for the trailing twelve months (TTM) ended in Dec. 2023 was 590.889 (Mar. 2023 ) + 708.956 (Jun. 2023 ) + 650.827 (Sep. 2023 ) + 681.851 (Dec. 2023 ) = $2,633 Mil.
Parker Hannifin's Cash Flow from Operations for the trailing twelve months (TTM) ended in Dec. 2023 was 718.76 (Mar. 2023 ) + 1185.036 (Jun. 2023 ) + 649.959 (Sep. 2023 ) + 702.028 (Dec. 2023 ) = $3,256 Mil.
Parker Hannifin's Cash Flow from Investing for the trailing twelve months (TTM) ended in Dec. 2023 was -63.185 (Mar. 2023 ) + -91.897 (Jun. 2023 ) + -55.994 (Sep. 2023 ) + -75.122 (Dec. 2023 ) = $-286 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.
Parker Hannifin (NYSE:PH) 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, Parker Hannifin has a Sloan Ratio of -1.14%, indicating the company is in the safe zone and there is no funny business with accruals.
Parker Hannifin Sloan Ratio % Related Terms
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Parker Hannifin (Parker Hannifin) Business Description
Parker Hannifin is an industrial conglomerate operating through two segments: diversified industrial, which serves a variety of end markets, and aerospace systems, which sells engine and actuation components. The diversified industrial segment consists of six groups, including engineered materials (sealing devices), filtration (filters and systems monitoring and removing contaminants from liquids and gases), fluid connectors (valves, couplings, and other fittings), instrumentation (flow manufacturing components and fluid control applications), and motion systems (hydraulic, pneumatic, and electromechanical components in industrial machinery and equipment). The segment boasts 17,100 independent distributors, and about 40% of its business occurs outside the United States.
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