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Alere Inc (NYSE:ALR)
Beneish M-Score
-2.49 (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 -2.49 suggests that the company is not a manipulator.

ALR' s 10-Year Beneish M-Score Range
Min: -3.52   Max: 3.11
Current: -2.49

-3.52
3.11

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 -2.48.


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 * 0.9638+0.528 * 1.0403+0.404 * 0.9067+0.892 * 0.9123+0.115 * 1.0185
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8225+4.679 * 0.0169-0.327 * 0.9785
=-2.49

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Accounts Receivable was $473 Mil.
Revenue was 629.156 + 608.153 + 666.857 + 649.21 = $2,553 Mil.
Gross Profit was 292.574 + 291.985 + 308.264 + 301.622 = $1,194 Mil.
Total Current Assets was $1,938 Mil.
Total Assets was $6,651 Mil.
Property, Plant and Equipment(Net PPE) was $448 Mil.
Depreciation, Depletion and Amortization(DDA) was $315 Mil.
Selling, General & Admin. Expense(SGA) was $835 Mil.
Total Current Liabilities was $1,138 Mil.
Long-Term Debt was $2,965 Mil.
Net Income was 19.904 + 209.14 + 111.286 + -98.384 = $242 Mil.
Non Operating Income was 3.532 + -1.869 + -2.895 + -8.087 = $-9 Mil.
Cash Flow from Operations was 4.149 + 28.378 + 16.089 + 90.33 = $139 Mil.
Accounts Receivable was $538 Mil.
Revenue was 647.398 + 625.239 + 772.326 + 753.882 = $2,799 Mil.
Gross Profit was 298.693 + 310.358 + 384.349 + 368.646 = $1,362 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 $393 Mil.
Selling, General & Admin. Expense(SGA) was $1,112 Mil.
Total Current Liabilities was $669 Mil.
Long-Term Debt was $3,738 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)
=(472.686 / 2553.376) / (537.605 / 2798.845)
=0.18512197 / 0.19208102
=0.9638

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)
=(291.985 / 2798.845) / (292.574 / 2553.376)
=0.48664574 / 0.46779049
=1.0403

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 - (1938.283 + 448.302) / 6651.394) / (1 - (1505.326 + 541.873) / 6990.665)
=0.64119025 / 0.70715247
=0.9067

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
=2553.376 / 2798.845
=0.9123

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))
=(393.165 / (393.165 + 541.873)) / (315.205 / (315.205 + 448.302))
=0.42048024 / 0.41283839
=1.0185

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)
=(834.519 / 2553.376) / (1112.201 / 2798.845)
=0.32682966 / 0.39737856
=0.8225

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)
=((2964.949 + 1138.012) / 6651.394) / ((3737.834 + 669.117) / 6990.665)
=0.61685731 / 0.63040512
=0.9785

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
=(241.946 - -9.319 - 138.946) / 6651.394
=0.0169

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 -2.49 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 1.01851.05521.10390.84871.11630.99951.0820.93290.97380.9948
GMI 1.08870.8970.85830.86960.98361.04161.00841.03021.02221.0494
AQI 1.07751.0111.11851.0850.94750.97250.97710.99020.98470.926
SGI 1.1281.34991.47431.8851.21491.1211.10731.18111.07470.8539
DEPI 0.93750.85831.20180.54731.00251.00461.09180.97071.03261.0491
SGAI 1.05820.92921.32541.10930.97111.05660.92110.99690.98360.9516
LVGI 0.94830.6651.08590.92951.17981.35131.17121.03741.04071.0412
TATA -0.0834-0.0507-0.0704-0.0282-0.0367-0.2075-0.1039-0.0574-0.0448-0.0328
M-score -2.66-2.30-2.38-2.04-2.44-3.46-2.83-2.65-2.65-2.77

Alere Inc Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 0.94640.97711.00760.97380.96951.02340.91350.9941.01120.9638
GMI 1.04741.04421.03871.02221.00411.02271.02971.05281.06371.0403
AQI 1.02160.98110.96890.98470.97480.97290.93750.9260.98150.9067
SGI 1.16641.13111.11011.07471.00990.94860.89420.85450.88210.9123
DEPI 0.96830.97430.99381.03261.0641.10341.04321.04911.02851.0185
SGAI 0.98050.9830.9940.98360.98671.00360.96410.9430.92340.8225
LVGI 1.04961.06141.05341.04071.02040.9991.04311.04120.9490.9785
TATA -0.0484-0.0507-0.0475-0.0449-0.0537-0.0508-0.0685-0.04010.00540.0169
M-score -2.59-2.63-2.61-2.65-2.76-2.73-2.99-2.80-2.49-2.49
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