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.
Snowflake's Sloan Ratio for the quarter that ended in Jan. 2024 was -30.60%.
Warning Sign:
When sloan ratio (-30.6)% higher than 25% or lower than -25%, earnings are more likely to be made up of accruals.
As of Jan. 2024, Snowflake has a Sloan Ratio of -30.60%, indicating earnings are more likely to be made up of accruals.
Snowflake Sloan Ratio % Historical Data
The historical data trend for Snowflake'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 Snowflake's Sloan Ratio %
For the Software - Application subindustry, Snowflake'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.
Snowflake's Sloan Ratio % Distribution in the Software Industry
For the Software industry and Technology sector, Snowflake's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where Snowflake's Sloan Ratio % falls into.
Snowflake 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.
Snowflake's Sloan Ratio for the fiscal year that ended in Jan. 2024 is calculated as
Snowflake's Net Income for the trailing twelve months (TTM) ended in Jan. 2024 was -225.627 (Apr. 2023 ) + -226.867 (Jul. 2023 ) + -214.251 (Oct. 2023 ) + -169.352 (Jan. 2024 ) = $-836 Mil.
Snowflake's Cash Flow from Operations for the trailing twelve months (TTM) ended in Jan. 2024 was 299.444 (Apr. 2023 ) + 83.191 (Jul. 2023 ) + 120.907 (Oct. 2023 ) + 344.58 (Jan. 2024 ) = $848 Mil.
Snowflake's Cash Flow from Investing for the trailing twelve months (TTM) ended in Jan. 2024 was -362.213 (Apr. 2023 ) + 101.042 (Jul. 2023 ) + 570.86 (Oct. 2023 ) + 522.569 (Jan. 2024 ) = $832 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.
Snowflake (NYSE:SNOW) 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 Jan. 2024, Snowflake has a Sloan Ratio of -30.60%, indicating earnings are more likely to be made up of accruals.
Snowflake Sloan Ratio % Related Terms
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Founded in 2012, Snowflake is a data lake, warehousing, and sharing company that came public in 2020. To date, the company has over 3,000 customers, including nearly 30% of the Fortune 500 as its customers. Snowflake's data lake stores unstructured and semistructured data that can then be used in analytics to create insights stored in its data warehouse. Snowflake's data sharing capability allows enterprises to easily buy and ingest data almost instantaneously compared with a traditionally months-long process. Overall, the company is known for the fact that all of its data solutions that can be hosted on various public clouds.
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