Profit is an opinion, cash is a fact: the accrual check measures whether reported profits are backed by real money, automated across the entire market.
Save the strategy and StockScorer checks its rules for you every day. You'll get a heads-up whenever a stock crosses the upper or lower score threshold.
Gap to MSCI World: -100.3 percentage points total, -3.9 per year
Index, start = 100
Past performance is not a reliable indicator of future results.
Based on all 16,182 stocks with a score. Not rated are stocks that the profile does not classify because of a size limit or an exclusion rule.
| Score | Number of stocks | High match | Medium match | Low match |
|---|---|---|---|---|
| -3 | 176 | 0 | 0 | 176 |
| -2 | 0 | 0 | 0 | 0 |
| -1 | 383 | 0 | 0 | 383 |
| 0 | 2,994 | 0 | 2,994 | 0 |
| +1 | 10,698 | 10,698 | 0 | 0 |
| +2 | 1,931 | 1,931 | 0 | 0 |
Every stock runs through the same disclosed rules. The points add up to a score, traceable down to the individual rule.
Each rule checks a metric against a threshold, here for example “Excellent cash coverage (Sloan ratio < −10%)”.
In this profile, each rule that is met counts +1 to +2 or −1 to −3 points.
The sum is the score. That gives three classes: high, medium, low match.
These terms describe only the match with the criteria, not a recommendation to buy or sell.
The Sloan ratio compares book profit with actual cash flows: the core question of earnings quality.
Below −10% excellent (+2), −10 to +10% healthy (+1), from +10% the warning zone begins.
High accruals historically reverse: aggressive bookings are followed by weak subsequent years.
Values above +25% point to pulled-forward revenues or deferred costs: extreme danger (−3).
These exact rules run over every stock daily.
After signing up for free, you can copy the full profile in the rule editor, adjust its thresholds, and save it as your own starting profile.
See and copy all rules for freeIndex, start = 100
The backtest shows a total return of +139.8%. The MSCI World reaches +240.1% over the same period.
The same strategy with the same settings, started at every possible date. Each dot is a separate run over 5 years.
The periods overlap heavily, neighbouring runs share almost all periods. The spread therefore looks smaller than it would for independent periods. Past results say nothing about future ones.
Strategy calculated without fees and taxes, dividends reinvested.
Point-in-time composition since June 30, 2009: each period uses the members at that time. Stocks that left the market early may be missing, which favours the result.
Historical period, quarterly rebalancing. Past performance is not a reliable indicator of future results.
Purely mechanical rule application, no curated-list effect: stocks with a high match can fall just like any other stock.
Dots per card, in this order: Quality. Filled means at least one rule in the category is met.
For fundamental investors as a quality filter over any earnings-based strategy: a low P/E is worthless if the "E" in it is mere bookwork. Particularly valuable before entering a position after strong earnings jumps.
The accrual anomaly is one of the most robust findings in accounting research: Richard Sloan showed in 1996 that investors fixate on reported net income ("earnings fixation") and overlook how much of it is mere bookwork. Accruals (non-cash profit components such as pulled-forward revenues or deferred costs) reverse over time. Since the fidelity round, StockScorer measures them faithfully to Sloan, following the Hribar/Collins definition: (net income − operating cash flow) relative to average total assets, without the investing cash flow that the previously used practitioner variant additionally subtracted. Strongly negative values mean overflowing tills with an accounting-wise understated profit; values above +25% signal extreme danger: manipulation or impending write-downs.
The metric is calculated faithfully to Sloan as (net income − operating cash flow) divided by average total assets, per the Hribar/Collins refinement of Sloan's original. A value below −10% means excellent cash coverage (+2): the company really earns more than the income statement shows, typical with high non-cash depreciation. The zone from −10 to +10% counts as healthy (+1). For financials, accruals are not meaningfully measurable; they are held neutral.
From +10% the warning level begins (−1): a growing share of profit is not covered by payments. Above +25% extreme danger prevails (−3): such values arise from aggressive receivables booking, pulled-forward revenues or costs pushed into the future. The upper threshold is a uniform 1 point across all size classes (Sloan's finding is size-independent); without a computable metric the classification stays neutral in the middle.
Accruals < −10%: excellent cash coverage, cash flow clearly exceeds book profit (+2).
−10 to +10%: healthy zone, profit and cash flows match (+1).
+10 to +25%: warning level, high share of book profits (−1).
≥ +25%: extreme danger, indication of manipulation or impending write-downs (−3).
Financial: accruals not applicable, neutral middle classification (+1).
The strength: the check is a pure cash-flow reconciliation and thus hard to dress up: whoever pulls revenues forward cannot book the missing cash flow into existence. As a cross-check for any earnings-based metric (P/E, ROE, EPS growth) it exposes when their foundation wobbles. The StockScorer Score uses exactly this check as an exclusion rule.
Fidelity update as of 23 August 2026: the metric now follows Sloan's own definition (net income minus operating cash flow, relative to total assets) instead of the previously used practitioner "Sloan ratio", which additionally subtracted investing cash flow. The percentage bands (±10%, ±25%) themselves remain a practitioner convention: Sloan's original works with deciles across the whole market, not fixed percentage cutoffs. Extremely negative accruals (below −25%) count as the best decile in Sloan's own work; StockScorer deliberately awards no extra bonus for them, since such values more often signal one-off effects than durable strength.
Limits: single years can be distorted by legitimate one-offs (acquisitions, large projects, working-capital build-up before expansion); a high value is a prompt to investigate, not a verdict. The strategy also measures quality only, not valuation or growth; it unfolds its value above all in combination.
For sceptical fundamental investors who want to cross-check earnings quality systematically, as a filter over watchlists, before adding to positions, and over any strategy built on reported profits.