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Airgas Inc (NYSE:ARG)
Beneish M-Score
-2.79 (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.

Airgas Inc has a M-score of -2.79 suggests that the company is not a manipulator.

ARG' s Beneish M-Score Range Over the Past 10 Years
Min: -5.6   Max: 2.87
Current: -2.79

-5.6
2.87

During the past 13 years, the highest Beneish M-Score of Airgas Inc was 2.87. The lowest was -5.60. And the median was -2.70.


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 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 * 0.9686+0.528 * 0.9998+0.404 * 0.9988+0.892 * 1.0339+0.115 * 0.9934
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0054+4.679 * -0.0625-0.327 * 1.0601
=-2.79

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $720 Mil.
Revenue was 1374.569 + 1349.71 + 1301.723 + 1331.82 = $5,358 Mil.
Gross Profit was 773.396 + 752.544 + 718.721 + 742.887 = $2,988 Mil.
Total Current Assets was $1,416 Mil.
Total Assets was $6,164 Mil.
Property, Plant and Equipment(Net PPE) was $3,074 Mil.
Depreciation, Depletion and Amortization(DDA) was $342 Mil.
Selling, General & Admin. Expense(SGA) was $2,013 Mil.
Total Current Liabilities was $1,356 Mil.
Long-Term Debt was $1,956 Mil.
Net Income was 98.034 + 88.235 + 87.723 + 93.199 = $367 Mil.
Non Operating Income was 0.112 + 1.425 + 3.363 + -0.238 = $5 Mil.
Cash Flow from Operations was 147.918 + 223.743 + 203.353 + 172.766 = $748 Mil.
Accounts Receivable was $719 Mil.
Revenue was 1357.755 + 1313.587 + 1267.83 + 1242.846 = $5,182 Mil.
Gross Profit was 757.221 + 730.181 + 696.481 + 705.176 = $2,889 Mil.
Total Current Assets was $1,428 Mil.
Total Assets was $5,905 Mil.
Property, Plant and Equipment(Net PPE) was $2,871 Mil.
Depreciation, Depletion and Amortization(DDA) was $317 Mil.
Selling, General & Admin. Expense(SGA) was $1,936 Mil.
Total Current Liabilities was $987 Mil.
Long-Term Debt was $2,007 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)
=(720.21 / 5357.822) / (719.149 / 5182.018)
=0.13442216 / 0.13877779
=0.9686

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)
=(752.544 / 5182.018) / (773.396 / 5357.822)
=0.5575162 / 0.55760494
=0.9998

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 - (1415.699 + 3074.251) / 6163.938) / (1 - (1428.026 + 2871.224) / 5904.774)
=0.27157768 / 0.2719027
=0.9988

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
=5357.822 / 5182.018
=1.0339

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))
=(316.765 / (316.765 + 2871.224)) / (341.668 / (341.668 + 3074.251))
=0.09936201 / 0.10002228
=0.9934

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)
=(2012.741 / 5357.822) / (1936.281 / 5182.018)
=0.37566403 / 0.37365385
=1.0054

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)
=((1956.366 + 1356.191) / 6163.938) / ((2006.943 + 986.523) / 5904.774)
=0.5374092 / 0.50695691
=1.0601

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
=(367.191 - 4.662 - 747.78) / 6163.938
=-0.0625

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 -2.79 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.

Airgas Inc Annual Data

Mar06Mar07Mar08Mar09Mar10Mar11Mar12Mar13Mar14Mar15
DSRI 0.74351.29290.75630.92951.13492.68491.06211.04290.9640.966
GMI 1.01790.98720.98330.98090.95621.00751.01540.98650.98591.0018
AQI 1.02761.10481.04281.0341.01560.91280.9760.9721.05150.9786
SGI 1.1951.13271.25331.08280.8911.09711.11641.04451.02321.0458
DEPI 0.96291.14150.91990.93260.96720.95310.98850.96440.98840.9795
SGAI 0.95630.98370.98741.01231.07240.96340.98321.01321.00971.0015
LVGI 0.9071.16060.98820.96420.88441.11031.03731.11380.93040.9188
TATA -0.0871-0.0443-0.078-0.0702-0.0849-0.0046-0.0367-0.0399-0.0672-0.0594
M-score -2.90-2.30-2.84-2.79-2.85-0.93-2.50-2.65-2.77-2.73

Airgas Inc Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 1.57561.58950.9640.96780.99521.00160.9660.96120.96860.9602
GMI 1.00011.00020.98590.98630.99381.00091.00181.00350.99980.9894
AQI 0.99011.03281.05151.04711.04530.97620.97860.97910.99881.0043
SGI 0.64840.64841.02321.02531.02971.04011.04581.0461.03391.0096
DEPI 1.38491.38680.98840.99030.99020.98280.97950.99160.99340.9874
SGAI 1.00321.00131.00971.0091.00731.00211.00150.99981.00541.0221
LVGI 1.10181.05040.93040.94330.95030.93560.91880.95881.06011.0519
TATA -0.0578-0.0607-0.0672-0.0703-0.058-0.0566-0.0594-0.0631-0.0625-0.061
M-score -2.53-2.49-2.77-2.79-2.70-2.70-2.73-2.76-2.79-2.82
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