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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.
Airgas Inc has a M-score of -2.77 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Airgas Inc was -0.93. The lowest was -3.57. And the median was -2.67.
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 Airgas 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 * 0.964||+||0.528 * 0.9859||+||0.404 * 1.0515||+||0.892 * 1.0232||+||0.115 * 0.9884|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0097||+||4.679 * -0.0672||-||0.327 * 0.9304|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was $701 Mil.|
Revenue was 1267.83 + 1242.846 + 1281.97 + 1279.891 = $5,073 Mil.
Gross Profit was 696.481 + 705.176 + 718.958 + 704.348 = $2,825 Mil.
Total Current Assets was $1,399 Mil.
Total Assets was $5,793 Mil.
Property, Plant and Equipment(Net PPE) was $2,802 Mil.
Depreciation, Depletion and Amortization(DDA) was $305 Mil.
Selling, General & Admin. Expense(SGA) was $1,889 Mil.
Total Current Liabilities was $1,331 Mil.
Long-Term Debt was $1,707 Mil.
Net Income was 88.357 + 82.759 + 94.982 + 84.686 = $351 Mil.
Non Operating Income was 0.34 + -6.858 + 1.474 + 0.113 = $-5 Mil.
Cash Flow from Operations was 190.998 + 172.668 + 210.495 + 170.699 = $745 Mil.
|Accounts Receivable was $711 Mil.
Revenue was 1262.923 + 1207.708 + 1229.61 + 1257.256 = $4,957 Mil.
Gross Profit was 687.803 + 677.143 + 673.089 + 683.895 = $2,722 Mil.
Total Current Assets was $1,464 Mil.
Total Assets was $5,618 Mil.
Property, Plant and Equipment(Net PPE) was $2,686 Mil.
Depreciation, Depletion and Amortization(DDA) was $289 Mil.
Selling, General & Admin. Expense(SGA) was $1,829 Mil.
Total Current Liabilities was $862 Mil.
Long-Term Debt was $2,304 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)|
|=||(701.06 / 5072.537)||/||(710.74 / 4957.497)|
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)|
|=||(705.176 / 4957.497)||/||(696.481 / 5072.537)|
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 - (1399.087 + 2802.415) / 5793.314)||/||(1 - (1463.83 + 2686.305) / 5618.225)|
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))|
|=||(288.9 / (288.9 + 2686.305))||/||(305.306 / (305.306 + 2802.415))|
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)|
|=||(1889.123 / 5072.537)||/||(1828.524 / 4957.497)|
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)|
|=||((1706.774 + 1330.775) / 5793.314)||/||((2304.245 + 861.714) / 5618.225)|
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|
|=||(350.784 - -4.931||-||744.86)||/||5793.314|
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.
Airgas Inc has a M-score of -2.77 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
Airgas Inc Annual Data
Airgas Inc Quarterly Data