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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.
Alere Inc has a M-score of -2.74 suggests that the company is not a 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 * 0.9609||+||0.528 * 1.0272||+||0.404 * 0.9729||+||0.892 * 1.0103||+||0.115 * 1.0604|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0221||+||4.679 * -0.0513||-||0.327 * 0.999|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $538 Mil.|
Revenue was 737.943 + 716.622 + 772.326 + 753.882 = $2,981 Mil.
Gross Profit was 339.918 + 351.239 + 384.349 + 368.646 = $1,444 Mil.
Total Current Assets was $1,505 Mil.
Total Assets was $6,991 Mil.
Property, Plant and Equipment(Net PPE) was $542 Mil.
Depreciation, Depletion and Amortization(DDA) was $422 Mil.
Selling, General & Admin. Expense(SGA) was $1,206 Mil.
Total Current Liabilities was $669 Mil.
Long-Term Debt was $3,738 Mil.
Net Income was -49.655 + -6.221 + -3.687 + -19.448 = $-79 Mil.
Non Operating Income was 2.147 + 4.722 + 10.878 + -9.668 = $8 Mil.
Cash Flow from Operations was 19.259 + 105.908 + 85.672 + 60.346 = $271 Mil.
|Accounts Receivable was $554 Mil.
Revenue was 763.985 + 739.249 + 755.763 + 691.416 = $2,950 Mil.
Gross Profit was 384.487 + 364.257 + 373.868 + 345.775 = $1,468 Mil.
Total Current Assets was $1,409 Mil.
Total Assets was $7,100 Mil.
Property, Plant and Equipment(Net PPE) was $530 Mil.
Depreciation, Depletion and Amortization(DDA) was $459 Mil.
Selling, General & Admin. Expense(SGA) was $1,168 Mil.
Total Current Liabilities was $660 Mil.
Long-Term Debt was $3,820 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)|
|=||(537.605 / 2980.773)||/||(553.76 / 2950.413)|
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)|
|=||(351.239 / 2950.413)||/||(339.918 / 2980.773)|
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 - (1505.326 + 541.873) / 6990.665)||/||(1 - (1409.077 + 530.467) / 7100.005)|
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))|
|=||(459.129 / (459.129 + 530.467))||/||(421.502 / (421.502 + 541.873))|
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)|
|=||(1206.373 / 2980.773)||/||(1168.266 / 2950.413)|
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)|
|=||((3737.834 + 669.117) / 6990.665)||/||((3819.987 + 660.428) / 7100.005)|
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|
|=||(-79.011 - 8.079||-||271.185)||/||6990.665|
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 -2.74 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