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Alere Inc (NYSE:ALR)
Beneish M-Score
-2.74 (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 -2.74 suggests that the company is not a manipulator.

ALR' s 10-Year Beneish M-Score Range
Min: -3.49   Max: 9.48
Current: -2.74

-3.49
9.48

During the past 13 years, the highest Beneish M-Score of Alere Inc was 9.48. The lowest was -3.49. And the median was -2.46.


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 * 0.9609+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
=-2.74

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

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

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)
=(537.605 / 2980.773) / (553.76 / 2950.413)
=0.18035758 / 0.18768898
=0.9609

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)
=(351.239 / 2950.413) / (339.918 / 2980.773)
=0.49768863 / 0.48448909
=1.0272

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 - (1505.326 + 541.873) / 6990.665) / (1 - (1409.077 + 530.467) / 7100.005)
=0.70715247 / 0.72682498
=0.9729

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
=2980.773 / 2950.413
=1.0103

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))
=0.463956 / 0.4375264
=1.0604

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)
=0.40471817 / 0.39596694
=1.0221

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)
=0.63040512 / 0.63104392
=0.999

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
=(-79.011 - 8.079 - 271.185) / 6990.665
=-0.0513

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.


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 0.87061.02641.05521.13940.89071.03370.99981.0840.92810.9738
GMI 1.09221.09760.8970.85830.91090.9391.04161.00841.03021.0222
AQI 0.9641.07541.0111.11871.08550.94680.97250.97710.99020.9847
SGI 1.27161.11921.34991.47431.99091.15031.1211.10731.18111.0747
DEPI 0.82490.93750.85831.20180.5550.98861.00461.09180.97071.0326
SGAI 0.99351.06650.92921.32541.06251.01381.05660.92110.99690.9836
LVGI 1.03380.96140.6651.08540.92991.17981.35131.17121.03741.0407
TATA -0.0457-0.0834-0.0507-0.0703-0.0281-0.0367-0.2075-0.1039-0.0574-0.0448
M-score -2.57-2.66-2.30-2.35-1.88-2.60-3.46-2.83-2.66-2.65

Alere Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 1.05231.04890.99520.92810.94230.96990.99970.97380.940.9609
GMI 1.00521.00811.01551.03021.04741.04421.03871.02221.00711.0272
AQI 0.94151.0311.03920.99021.02160.98110.96890.98470.97480.9729
SGI 1.11371.15081.1731.18111.16641.13111.11011.07471.04151.0103
DEPI 1.08481.05671.04820.97070.96830.97430.99381.03261.04421.0604
SGAI 0.930.92360.93650.99690.98050.9830.9940.98360.99841.0221
LVGI 1.18381.11161.10231.03741.04961.06141.05341.04071.02040.999
TATA -0.104-0.1033-0.1001-0.0574-0.0486-0.0507-0.0475-0.0449-0.0534-0.0513
M-score -2.88-2.78-2.79-2.66-2.59-2.63-2.61-2.65-2.76-2.74
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