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Alere Inc (NYSE:ALR)
Beneish M-Score
-2.35 (As of Today)

The zones of discrimination for M-Score is as such:

An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.

Alere Inc has a M-score of -2.35 suggests that the company is not a manipulator.

ALR' s Beneish M-Score Range Over the Past 10 Years
Min: -3.52   Max: 3.11
Current: -2.35

-3.52
3.11

During the past 13 years, the highest Beneish M-Score of Alere Inc was 3.11. The lowest was -3.52. And the median was -2.44.


Definition

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.

The M-Score Variables:

The M-score of Alere Inc for today is based on a combination of the following eight different indices:

M=-4.84+0.92 * DSRI+0.528 * GMI+0.404 * AQI+0.892 * SGI+0.115 * DEPI
=-4.84+0.92 * 1.1584+0.528 * 1.0236+0.404 * 0.924+0.892 * 0.7547+0.115 * 1.1269
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.7876+4.679 * 0.0348-0.327 * 0.9668
=-2.35

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $452 Mil.
Revenue was 602.044 + 629.156 + 608.153 + 396.866 = $2,236 Mil.
Gross Profit was 275.049 + 292.574 + 291.985 + 186.137 = $1,046 Mil.
Total Current Assets was $1,887 Mil.
Total Assets was $6,574 Mil.
Property, Plant and Equipment(Net PPE) was $445 Mil.
Depreciation, Depletion and Amortization(DDA) was $279 Mil.
Selling, General & Admin. Expense(SGA) was $696 Mil.
Total Current Liabilities was $1,126 Mil.
Long-Term Debt was $2,994 Mil.
Net Income was 5.562 + 19.904 + 209.14 + 151.943 = $387 Mil.
Non Operating Income was 4.745 + 3.532 + -1.869 + -2.664 = $4 Mil.
Cash Flow from Operations was 104.723 + 4.149 + 28.378 + 16.936 = $154 Mil.
Accounts Receivable was $517 Mil.
Revenue was 736.246 + 737.943 + 716.622 + 772.326 = $2,963 Mil.
Gross Profit was 342.859 + 339.918 + 351.239 + 384.349 = $1,418 Mil.
Total Current Assets was $1,527 Mil.
Total Assets was $6,809 Mil.
Property, Plant and Equipment(Net PPE) was $527 Mil.
Depreciation, Depletion and Amortization(DDA) was $403 Mil.
Selling, General & Admin. Expense(SGA) was $1,171 Mil.
Total Current Liabilities was $717 Mil.
Long-Term Debt was $3,696 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(452.366 / 2236.219) / (517.434 / 2963.137)
=0.20229056 / 0.17462372
=1.1584

2. GMI = Gross Margin Index

Measured as the ratio of gross margin in year t-1 to gross margin in year t.

Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(292.574 / 2963.137) / (275.049 / 2236.219)
=0.47867007 / 0.4676398
=1.0236

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (1886.71 + 445.315) / 6574.165) / (1 - (1527.159 + 526.922) / 6808.621)
=0.64527434 / 0.69831174
=0.924

4. SGI = Sales Growth Index

Ratio of sales in year t to sales in year t-1.

Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=2236.219 / 2963.137
=0.7547

5. DEPI = Depreciation Index

Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.

DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.

DEPI=(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1)) / (Depreciation_t / (Depreciaton_t + PPE_t))
=(403.497 / (403.497 + 526.922)) / (278.588 / (278.588 + 445.315))
=0.43367236 / 0.38484162
=1.1269

6. SGAI = Sales, General and Administrative expenses Index

The ratio of SGA expenses in year t relative to year t-1.

SGA expenses index > 1 means that the company is becoming less efficient in generate sales.

SGAI=(SGA_t / Sales_t) / (SGA_t-1 /Sales_t-1)
=(695.951 / 2236.219) / (1170.93 / 2963.137)
=0.31121773 / 0.39516566
=0.7876

7. LVGI = Leverage Index

The ratio of total debt to total assets in year t relative to yeat t-1.

An LVGI > 1 indicates an increase$sgai= in leverage

LVGI=((LTD_t + CurrentLiabilities_t) / TotalAssets_t) / ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)
=((2993.928 + 1126.015) / 6574.165) / ((3696.438 + 716.886) / 6808.621)
=0.62668689 / 0.64819646
=0.9668

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(386.549 - 3.744 - 154.186) / 6574.165
=0.0348

An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.

Alere Inc has a M-score of -2.35 suggests that the company will not be a manipulator.


Related Terms

Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Alere Inc Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.01851.05521.10390.84871.11630.99951.0820.93290.97380.9948
GMI 1.08870.8970.85830.86960.98361.04161.00841.03021.02221.0494
AQI 1.07751.0111.11851.0850.94750.97250.97710.99020.98470.9229
SGI 1.1281.34991.47431.8851.21491.1211.10731.18111.07470.8539
DEPI 0.93750.85831.20180.54731.00251.00461.09180.97071.03261.0533
SGAI 1.05820.92921.32541.10930.97111.05660.92110.99690.98360.9516
LVGI 0.94830.6651.08590.92951.17981.35131.17121.03741.04071.0311
TATA -0.0834-0.0507-0.0704-0.0282-0.0367-0.2075-0.1039-0.0574-0.0448-0.0326
M-score -2.66-2.30-2.38-2.04-2.44-3.46-2.83-2.65-2.65-2.77

Alere Inc Quarterly Data

Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15
DSRI 0.97711.00760.97380.940.96090.92480.99441.08181.10561.1584
GMI 1.04421.03871.02221.00711.02721.0341.05131.05741.03131.0236
AQI 0.98110.96890.98470.97480.97290.97290.92290.98150.90670.924
SGI 1.13111.11011.07471.04151.01030.98350.85420.82450.79520.7547
DEPI 0.97430.99381.03261.04421.06041.05761.05331.07571.12131.1269
SGAI 0.9830.9940.98360.99841.02210.98910.95730.91040.78660.7876
LVGI 1.06141.05341.04071.02040.9991.03011.03110.9490.97850.9668
TATA -0.0507-0.0475-0.0449-0.0535-0.0513-0.0671-0.03260.01310.02460.0348
M-score -2.63-2.61-2.65-2.76-2.74-2.87-2.77-2.44-2.41-2.35
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