Sloan Ratio – Analyzing Accruals to Pick Winners

8 March 2017|

Under generally accepted accounting principles (GAAP), the definition of earnings is the change in owner equity plus dividends (if any). Earnings are shown on the company’s income statement, which is nothing more than a measurement of the change between balance sheet items. As legendary value investor Ben Graham wrote in his equally-legendary investment book Security [...]

Sloan Ratio – Why investors should care about accruals & earnings quality

13 February 2017|

Not All Earnings are Created Equal Earnings is the main word that holds the greatest importance on stock market. Ironically, earnings is not real money. $1 in earnings does not equal $1 in cash a company has to spend. Earnings contain a lot of non cash earnings which is called accruals. The non cash part of [...]