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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 -2.46.
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 * 1.0075||+||0.528 * 1.0352||+||0.404 * 0.9589||+||0.892 * 0.9663||+||0.115 * 1.0248|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8487||+||4.679 * 0.0288||-||0.327 * 0.9548|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $452 Mil.|
Revenue was 602.044 + 629.156 + 608.153 + 666.857 = $2,506 Mil.
Gross Profit was 275.049 + 292.574 + 291.985 + 308.264 = $1,168 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 $319 Mil.
Selling, General & Admin. Expense(SGA) was $815 Mil.
Total Current Liabilities was $1,126 Mil.
Long-Term Debt was $2,994 Mil.
Net Income was 5.562 + 19.904 + 209.14 + 111.286 = $346 Mil.
Non Operating Income was 4.745 + 3.532 + -1.869 + -2.895 = $4 Mil.
Cash Flow from Operations was 104.723 + 4.149 + 28.378 + 16.089 = $153 Mil.
|Accounts Receivable was $465 Mil.
Revenue was 649.21 + 647.398 + 625.239 + 671.888 = $2,594 Mil.
Gross Profit was 301.622 + 298.693 + 310.358 + 340.49 = $1,251 Mil.
Total Current Assets was $1,762 Mil.
Total Assets was $6,804 Mil.
Property, Plant and Equipment(Net PPE) was $463 Mil.
Depreciation, Depletion and Amortization(DDA) was $346 Mil.
Selling, General & Admin. Expense(SGA) was $994 Mil.
Total Current Liabilities was $770 Mil.
Long-Term Debt was $3,696 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)|
|=||(452.366 / 2506.21)||/||(464.696 / 2593.735)|
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)|
|=||(292.574 / 2593.735)||/||(275.049 / 2506.21)|
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 - (1886.71 + 445.315) / 6574.165)||/||(1 - (1762.226 + 463.282) / 6804.12)|
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))|
|=||(345.763 / (345.763 + 463.282))||/||(318.581 / (318.581 + 445.315))|
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)|
|=||(814.764 / 2506.21)||/||(993.593 / 2593.735)|
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)||/||((3695.892 + 769.832) / 6804.12)|
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|
|=||(345.892 - 3.513||-||153.339)||/||6574.165|
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 -2.32 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