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.
Vertex Pharmaceuticals's Sloan Ratio for the quarter that ended in Dec. 2023 was 14.18%.
As of Dec. 2023, Vertex Pharmaceuticals has a Sloan Ratio of 14.18%, indicating there is a warning stage of accrual build up.
Vertex Pharmaceuticals Sloan Ratio % Historical Data
* 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 Vertex Pharmaceuticals's Sloan Ratio %
For the Biotechnology subindustry, Vertex Pharmaceuticals'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.
Vertex Pharmaceuticals's Sloan Ratio % Distribution in the Biotechnology Industry
For the Biotechnology industry and Healthcare sector, Vertex Pharmaceuticals's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where Vertex Pharmaceuticals's Sloan Ratio % falls into.
Vertex Pharmaceuticals 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.
Vertex Pharmaceuticals's Sloan Ratio for the fiscal year that ended in Dec. 2023 is calculated as
Vertex Pharmaceuticals's Net Income for the trailing twelve months (TTM) ended in Dec. 2023 was 699.8 (Mar. 2023 ) + 915.7 (Jun. 2023 ) + 1035.3 (Sep. 2023 ) + 968.8 (Dec. 2023 ) = $3,620 Mil.
Vertex Pharmaceuticals's Cash Flow from Operations for the trailing twelve months (TTM) ended in Dec. 2023 was 899.9 (Mar. 2023 ) + 1134.4 (Jun. 2023 ) + 1268.4 (Sep. 2023 ) + 234.6 (Dec. 2023 ) = $3,537 Mil.
Vertex Pharmaceuticals's Cash Flow from Investing for the trailing twelve months (TTM) ended in Dec. 2023 was -1833.6 (Mar. 2023 ) + -303.9 (Jun. 2023 ) + -117.7 (Sep. 2023 ) + -886.5 (Dec. 2023 ) = $-3,142 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.
Vertex Pharmaceuticals (NAS:VRTX) 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, Vertex Pharmaceuticals has a Sloan Ratio of 14.18%, indicating there is a warning stage of accrual build up.
Vertex Pharmaceuticals Sloan Ratio % Related Terms
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Vertex Pharmaceuticals (Vertex Pharmaceuticals) Business Description
Vertex Pharmaceuticals is a global biotechnology company that discovers and develops small-molecule drugs for the treatment of serious diseases. Its key drugs are Kalydeco, Orkambi, Symdeko, and Trikafta/Kaftrio for cystic fibrosis, where Vertex therapies remain the standard of care globally. Vertex is diversifying its pipeline through gene-editing therapies such as CTX001 for beta thalassemia and sickle-cell disease, small-molecule inhibitors targeting acute and chronic pain using nonopioid treatments, and small-molecule inhibitors of APOL1-mediated kidney diseases. Vertex is also investigating cell therapies to deliver a potential functional cure for type 1 diabetes.
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