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Alere Inc (NYSE:ALR)
Beneish M-Score
-2.65 (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 -2.65 suggests that the company is not a manipulator.

ALR' s 10-Year Beneish M-Score Range
Min: -3.46   Max: -0.84
Current: -2.65

-3.46
-0.84

During the past 13 years, the highest Beneish M-Score of Alere Inc was -0.84. The lowest was -3.46. 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 * 0.9647+0.528 * 1.0696+0.404 * 0.962+0.892 * 0.9873+0.115 * 1.0488
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9903+4.679 * -0.0326-0.327 * 1.0142
=-2.65

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $466 Mil.
Revenue was 396.866 + 736.246 + 737.943 + 716.622 = $2,588 Mil.
Gross Profit was 186.137 + 342.859 + 339.918 + 351.239 = $1,220 Mil.
Total Current Assets was $1,833 Mil.
Total Assets was $6,718 Mil.
Property, Plant and Equipment(Net PPE) was $457 Mil.
Depreciation, Depletion and Amortization(DDA) was $336 Mil.
Selling, General & Admin. Expense(SGA) was $982 Mil.
Total Current Liabilities was $744 Mil.
Long-Term Debt was $3,632 Mil.
Net Income was 151.943 + -86.149 + -49.655 + -6.221 = $10 Mil.
Non Operating Income was -2.664 + -8.978 + 2.147 + 4.722 = $-5 Mil.
Cash Flow from Operations was 16.936 + 91.728 + 19.259 + 105.908 = $234 Mil.
Accounts Receivable was $489 Mil.
Revenue was 364.529 + 753.32 + 763.985 + 739.249 = $2,621 Mil.
Gross Profit was 203.89 + 369.317 + 384.487 + 364.257 = $1,322 Mil.
Total Current Assets was $1,754 Mil.
Total Assets was $7,061 Mil.
Property, Plant and Equipment(Net PPE) was $468 Mil.
Depreciation, Depletion and Amortization(DDA) was $374 Mil.
Selling, General & Admin. Expense(SGA) was $1,005 Mil.
Total Current Liabilities was $748 Mil.
Long-Term Debt was $3,786 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)
=(466.106 / 2587.677) / (489.392 / 2621.083)
=0.18012526 / 0.18671366
=0.9647

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)
=(342.859 / 2621.083) / (186.137 / 2587.677)
=0.50435297 / 0.47152446
=1.0696

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 - (1832.793 + 456.767) / 6718.041) / (1 - (1754.28 + 468.232) / 7060.814)
=0.65919232 / 0.68523289
=0.962

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
=2587.677 / 2621.083
=0.9873

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))
=(374.473 / (374.473 + 468.232)) / (335.833 / (335.833 + 456.767))
=0.44437021 / 0.42371057
=1.0488

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)
=(982.115 / 2587.677) / (1004.516 / 2621.083)
=0.37953539 / 0.38324464
=0.9903

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)
=((3631.945 + 743.784) / 6718.041) / ((3786.03 + 748.485) / 7060.814)
=0.65134003 / 0.64220853
=1.0142

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
=(9.918 - -4.773 - 233.831) / 6718.041
=-0.0326

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 -2.65 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 1.01851.05521.10390.84871.11630.99951.0820.93291.00420.9646
GMI 1.08870.8970.85830.86960.98361.04161.00841.03021.00391.0685
AQI 1.07751.0111.11851.0850.94750.97250.97710.99020.94470.962
SGI 1.1281.34991.47431.8851.21491.1211.10731.18110.92940.9873
DEPI 0.93750.85831.20180.54731.00251.01381.0910.96251.03711.0488
SGAI 1.05820.92921.32541.10930.97111.05660.92110.99690.94490.9906
LVGI 0.94830.6651.08590.92951.17981.35131.17121.03741.0581.0142
TATA -0.0834-0.0507-0.0704-0.0282-0.0364-0.2075-0.1039-0.0563-0.0427-0.0326
M-score -2.66-2.30-2.38-2.04-2.44-3.46-2.83-2.65-2.76-2.65

Alere Inc Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 1.0240.93290.94640.97711.00781.00381.08781.11351.07220.9647
GMI 1.01551.03021.04741.04421.0381.00470.98991.01261.02241.0696
AQI 1.03920.99021.02160.98110.96890.94470.97480.97290.97290.962
SGI 1.1731.18111.16641.13111.10980.92980.90010.87190.84830.9873
DEPI 1.04670.96250.9490.96640.98751.03711.15341.16911.16891.0488
SGAI 0.93650.99690.98050.9830.99040.95080.96540.99140.96240.9903
LVGI 1.10231.03741.04961.06141.05341.0581.02040.9991.03011.0142
TATA -0.1001-0.0564-0.0475-0.0496-0.0464-0.0429-0.0514-0.0492-0.065-0.0326
M-score -2.77-2.65-2.59-2.62-2.60-2.77-2.73-2.70-2.84-2.65
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