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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.
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.
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 * 1.0818||+||0.528 * 1.0574||+||0.404 * 0.9815||+||0.892 * 0.8245||+||0.115 * 1.0757|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9104||+||4.679 * 0.0131||-||0.327 * 0.949|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $472 Mil.|
Revenue was 608.153 + 396.866 + 736.246 + 737.943 = $2,479 Mil.
Gross Profit was 291.985 + 186.137 + 342.859 + 339.918 = $1,161 Mil.
Total Current Assets was $1,439 Mil.
Total Assets was $6,148 Mil.
Property, Plant and Equipment(Net PPE) was $447 Mil.
Depreciation, Depletion and Amortization(DDA) was $312 Mil.
Selling, General & Admin. Expense(SGA) was $897 Mil.
Total Current Liabilities was $661 Mil.
Long-Term Debt was $3,032 Mil.
Net Income was 209.14 + 151.943 + -86.149 + -49.655 = $225 Mil.
Non Operating Income was -1.869 + -2.664 + -8.978 + 2.147 = $-11 Mil.
Cash Flow from Operations was 28.378 + 16.936 + 91.728 + 19.259 = $156 Mil.
|Accounts Receivable was $529 Mil.
Revenue was 716.622 + 772.326 + 753.882 + 763.985 = $3,007 Mil.
Gross Profit was 351.239 + 384.349 + 368.646 + 384.487 = $1,489 Mil.
Total Current Assets was $1,521 Mil.
Total Assets was $7,036 Mil.
Property, Plant and Equipment(Net PPE) was $545 Mil.
Depreciation, Depletion and Amortization(DDA) was $433 Mil.
Selling, General & Admin. Expense(SGA) was $1,195 Mil.
Total Current Liabilities was $692 Mil.
Long-Term Debt was $3,761 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(471.663 / 2479.208)||/||(528.793 / 3006.815)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(186.137 / 3006.815)||/||(291.985 / 2479.208)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (1439.248 + 446.705) / 6148.371)||/||(1 - (1521.103 + 545.051) / 7036.186)|
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.
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))|
|=||(432.546 / (432.546 + 545.051))||/||(312.115 / (312.115 + 446.705))|
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)|
|=||(897.285 / 2479.208)||/||(1195.347 / 3006.815)|
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)|
|=||((3031.594 + 661.243) / 6148.371)||/||((3760.886 + 692.181) / 7036.186)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(225.279 - -11.364||-||156.301)||/||6148.371|
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 -2.44 suggests that the company will not be a manipulator.
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
Alere Inc Annual Data
Alere Inc Quarterly Data