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Alere Inc (NYSE:ALR)
Beneish M-Score
-2.76 (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 -2.76 suggests that the company is not a manipulator.

ALR' s 10-Year Beneish M-Score Range
Min: -3.5   Max: 3.11
Current: -2.76

-3.5
3.11

During the past 13 years, the highest Beneish M-Score of Alere Inc was 3.11. The lowest was -3.50. And the median was -2.40.


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 * 0.94+0.528 * 1.0071+0.404 * 0.9748+0.892 * 1.0415+0.115 * 1.0499
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9984+4.679 * -0.0535-0.327 * 1.0204
=-2.76

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
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.
Net Income was -6.221 + -3.687 + -19.448 + -60.569 = $-90 Mil.
Non Operating Income was 4.722 + 10.878 + -9.668 + 1.063 = $7 Mil.
Cash Flow from Operations was 105.908 + 85.672 + 60.346 + 27.698 = $280 Mil.
Accounts Receivable was $540 Mil.
Revenue was 739.249 + 755.763 + 691.416 + 700.517 = $2,887 Mil.
Gross Profit was 364.257 + 373.868 + 345.775 + 355.608 = $1,440 Mil.
Total Current Assets was $1,467 Mil.
Total Assets was $7,248 Mil.
Property, Plant and Equipment(Net PPE) was $529 Mil.
Depreciation, Depletion and Amortization(DDA) was $459 Mil.
Selling, General & Admin. Expense(SGA) was $1,149 Mil.
Total Current Liabilities was $695 Mil.
Long-Term Debt was $3,800 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)
=(528.793 / 3006.815) / (540.093 / 2886.945)
=0.17586483 / 0.18708115
=0.94

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)
=(384.349 / 2886.945) / (351.239 / 3006.815)
=0.49862675 / 0.4951156
=1.0071

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 - (1521.103 + 545.051) / 7036.186) / (1 - (1467.177 + 529.164) / 7248.475)
=0.70635313 / 0.72458469
=0.9748

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
=3006.815 / 2886.945
=1.0415

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))
=(459.096 / (459.096 + 529.164)) / (432.546 / (432.546 + 545.051))
=0.46454981 / 0.4424584
=1.0499

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)
=(1195.347 / 3006.815) / (1149.49 / 2886.945)
=0.39754591 / 0.39816831
=0.9984

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)
=((3760.886 + 692.181) / 7036.186) / ((3800.457 + 695.287) / 7248.475)
=0.6328808 / 0.62023308
=1.0204

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
=(-89.925 - 6.995 - 279.624) / 7036.186
=-0.0535

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 -2.76 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.87361.01851.05521.13940.88021.0460.99981.07830.93290.9738
GMI 1.09911.08870.8970.85830.86960.98361.04161.00841.03021.0222
AQI 0.96891.07751.0111.11851.0850.94750.97250.97710.99020.9847
SGI 1.26711.1281.34991.47431.8851.21491.1211.10731.18111.0747
DEPI 0.85080.93750.85831.20180.54731.00251.01381.0910.96251.0326
SGAI 0.98791.05820.92921.32541.10930.97111.05660.92110.99690.9836
LVGI 1.04140.94830.6651.08590.92951.17981.35131.17121.03741.0407
TATA -0.0498-0.0834-0.0507-0.0704-0.0282-0.0364-0.2075-0.1039-0.0563-0.0448
M-score -2.58-2.66-2.30-2.35-2.02-2.50-3.46-2.84-2.65-2.65

Alere Inc Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 1.07831.05231.04890.99520.93290.94230.96990.99970.97380.94
GMI 1.00841.00521.00811.01551.03021.04741.04421.03871.02221.0071
AQI 0.97710.94151.0311.03920.99021.02160.98110.96890.98470.9748
SGI 1.10731.11371.15081.1731.18111.16641.13111.11011.07471.0415
DEPI 1.0911.09091.05561.04670.96250.9490.96640.98631.03261.0499
SGAI 0.92110.930.92360.93650.99690.98050.9830.9940.98360.9984
LVGI 1.17121.18381.11161.10231.03741.04961.06141.05341.04071.0204
TATA -0.1039-0.104-0.1034-0.1001-0.0564-0.0475-0.0497-0.0465-0.045-0.0535
M-score -2.84-2.88-2.78-2.79-2.65-2.59-2.63-2.61-2.65-2.76
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