Sloan ratio

What is Sloan ratio?

Sloan ratio counts as Net income minus Cash flow from operations and Cash flow from investing, divided by Total assets.

Formula:

(Net income - Cash flow from operations - Cash flow from investing) / Total assets

What does Sloan ratio mean?

This ratio is based on an article by Richard Sloan, according to which companies with small or negative accruals outperform shares of companies with large ones. Additionally, if the Sloan ratio is between -10% and 10%, then the company is in a safe zone.