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Alere Inc (NYSE:ALR)
Beneish M-Score
-2.87 (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 -2.87 suggests that the company is not a manipulator.

ALR' s 10-Year Beneish M-Score Range
Min: -3.52   Max: 3.11
Current: -2.87

-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 -2.44.


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 * 0.9248+0.528 * 1.034+0.404 * 0.9729+0.892 * 0.9835+0.115 * 1.0576
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9891+4.679 * -0.0671-0.327 * 1.0301
=-2.87

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $517 Mil.
Revenue was 736.246 + 737.943 + 716.622 + 772.326 = $2,963 Mil.
Gross Profit was 342.859 + 339.918 + 351.239 + 384.349 = $1,418 Mil.
Total Current Assets was $1,527 Mil.
Total Assets was $6,809 Mil.
Property, Plant and Equipment(Net PPE) was $527 Mil.
Depreciation, Depletion and Amortization(DDA) was $403 Mil.
Selling, General & Admin. Expense(SGA) was $1,171 Mil.
Total Current Liabilities was $717 Mil.
Long-Term Debt was $3,696 Mil.
Net Income was -86.149 + -49.655 + -6.221 + -3.687 = $-146 Mil.
Non Operating Income was -8.978 + 2.147 + 4.722 + 10.878 = $9 Mil.
Cash Flow from Operations was 91.728 + 19.259 + 105.908 + 85.672 = $303 Mil.
Accounts Receivable was $569 Mil.
Revenue was 753.882 + 763.985 + 739.249 + 755.763 = $3,013 Mil.
Gross Profit was 368.646 + 384.487 + 364.257 + 373.868 = $1,491 Mil.
Total Current Assets was $1,475 Mil.
Total Assets was $7,155 Mil.
Property, Plant and Equipment(Net PPE) was $544 Mil.
Depreciation, Depletion and Amortization(DDA) was $461 Mil.
Selling, General & Admin. Expense(SGA) was $1,204 Mil.
Total Current Liabilities was $696 Mil.
Long-Term Debt was $3,805 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)
=(517.434 / 2963.137) / (568.873 / 3012.879)
=0.17462372 / 0.18881376
=0.9248

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)
=(339.918 / 3012.879) / (342.859 / 2963.137)
=0.49496113 / 0.47867007
=1.034

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 - (1527.159 + 526.922) / 6808.621) / (1 - (1474.817 + 544.271) / 7154.619)
=0.69831174 / 0.71779238
=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
=2963.137 / 3012.879
=0.9835

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))
=(461.165 / (461.165 + 544.271)) / (403.497 / (403.497 + 526.922))
=0.45867166 / 0.43367236
=1.0576

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)
=(1170.93 / 2963.137) / (1203.749 / 3012.879)
=0.39516566 / 0.39953447
=0.9891

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)
=((3696.438 + 716.886) / 6808.621) / ((3805.458 + 696.478) / 7154.619)
=0.64819646 / 0.6292349
=1.0301

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
=(-145.712 - 8.769 - 302.567) / 6808.621
=-0.0671

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 -2.87 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 0.87361.01851.05521.10390.84871.11630.99951.0820.93290.9738
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 0.85080.93750.85831.20180.54731.00251.00461.09180.97071.0326
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 -0.0498-0.0834-0.0507-0.0704-0.0282-0.0367-0.2075-0.1039-0.0574-0.0448
M-score -2.58-2.66-2.30-2.38-2.04-2.44-3.46-2.83-2.65-2.65

Alere Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 1.07251.0240.93290.94640.97711.00760.97380.940.96090.9248
GMI 1.00811.01551.03021.04741.04421.03871.02221.00711.02721.034
AQI 1.0311.03920.99021.02160.98110.96890.98470.97480.97290.9729
SGI 1.15081.1731.18111.16641.13111.11011.07471.04151.01030.9835
DEPI 1.05671.04820.97070.96830.97430.99381.03261.04421.06041.0576
SGAI 0.92360.93650.99690.98050.9830.9940.98360.99841.02210.9891
LVGI 1.11161.10231.03741.04961.06141.05341.04071.02040.9991.0301
TATA -0.1033-0.1001-0.0574-0.0484-0.0507-0.0475-0.0449-0.0535-0.0513-0.0671
M-score -2.76-2.76-2.65-2.59-2.63-2.61-2.65-2.76-2.74-2.87
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