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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 -2.76 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Airgas Inc was -0.87. The lowest was -3.95. And the median was -2.63.
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 * 1.0038||+||0.528 * 0.9803||+||0.404 * 1.0328||+||0.892 * 1.0267||+||0.115 * 0.9771|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0162||+||4.679 * -0.0607||-||0.327 * 1.0504|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $665 Mil.|
Revenue was 1242.846 + 1281.97 + 1279.891 + 1262.923 = $5,068 Mil.
Gross Profit was 705.176 + 718.958 + 704.348 + 702.757 = $2,831 Mil.
Total Current Assets was $1,402 Mil.
Total Assets was $5,755 Mil.
Property, Plant and Equipment(Net PPE) was $2,769 Mil.
Depreciation, Depletion and Amortization(DDA) was $302 Mil.
Selling, General & Admin. Expense(SGA) was $1,895 Mil.
Total Current Liabilities was $1,353 Mil.
Long-Term Debt was $1,705 Mil.
Net Income was 82.759 + 94.982 + 84.686 + 86.141 = $349 Mil.
Non Operating Income was -6.858 + 1.474 + 0.113 + 4.165 = $-1 Mil.
Cash Flow from Operations was 172.668 + 210.495 + 170.699 + 145.21 = $699 Mil.
|Accounts Receivable was $645 Mil.
Revenue was 1207.708 + 1229.61 + 1257.256 + 1241.149 = $4,936 Mil.
Gross Profit was 677.143 + 673.089 + 683.895 + 669.001 = $2,703 Mil.
Total Current Assets was $1,389 Mil.
Total Assets was $5,539 Mil.
Property, Plant and Equipment(Net PPE) was $2,674 Mil.
Depreciation, Depletion and Amortization(DDA) was $284 Mil.
Selling, General & Admin. Expense(SGA) was $1,817 Mil.
Total Current Liabilities was $1,095 Mil.
Long-Term Debt was $1,707 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)|
|=||(664.966 / 5067.63)||/||(645.174 / 4935.723)|
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)|
|=||(718.958 / 4935.723)||/||(705.176 / 5067.63)|
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 - (1402.373 + 2769.12) / 5755.259)||/||(1 - (1388.957 + 2674.258) / 5539.061)|
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))|
|=||(283.99 / (283.99 + 2674.258))||/||(301.693 / (301.693 + 2769.12))|
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)|
|=||(1895.319 / 5067.63)||/||(1816.612 / 4935.723)|
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)|
|=||((1704.744 + 1353.093) / 5755.259)||/||((1706.926 + 1094.755) / 5539.061)|
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|
|=||(348.568 - -1.106||-||699.072)||/||5755.259|
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 -2.76 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