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Airgas Inc (NYSE:ARG)
Beneish M-Score
-2.70 (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 -2.70 suggests that the company is not a manipulator.

ARG' s 10-Year Beneish M-Score Range
Min: -3.77   Max: -0.86
Current: -2.7

-3.77
-0.86

During the past 13 years, the highest Beneish M-Score of Airgas Inc was -0.86. The lowest was -3.77. And the median was -2.66.


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 * 0.9952+0.528 * 0.9938+0.404 * 1.0453+0.892 * 1.0297+0.115 * 0.9902
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0073+4.679 * -0.058-0.327 * 0.9503
=-2.70

* 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 $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.
Net Income was 98.312 + 88.852 + 88.357 + 82.759 = $358 Mil.
Non Operating Income was 0.081 + 1.869 + 0.34 + -6.858 = $-5 Mil.
Cash Flow from Operations was 144.946 + 196.972 + 190.998 + 172.668 = $706 Mil.
Accounts Receivable was $702 Mil.
Revenue was 1281.97 + 1279.891 + 1262.923 + 1207.708 = $5,032 Mil.
Gross Profit was 718.958 + 704.348 + 687.803 + 677.143 = $2,788 Mil.
Total Current Assets was $1,445 Mil.
Total Assets was $5,626 Mil.
Property, Plant and Equipment(Net PPE) was $2,718 Mil.
Depreciation, Depletion and Amortization(DDA) was $297 Mil.
Selling, General & Admin. Expense(SGA) was $1,867 Mil.
Total Current Liabilities was $1,425 Mil.
Long-Term Debt was $1,577 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)
=(719.149 / 5182.018) / (701.77 / 5032.492)
=0.13877779 / 0.13944781
=0.9952

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)
=(730.181 / 5032.492) / (757.221 / 5182.018)
=0.55404996 / 0.5575162
=0.9938

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 - (1428.026 + 2871.224) / 5904.774) / (1 - (1445.337 + 2717.554) / 5626.449)
=0.2719027 / 0.26012108
=1.0453

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
=5182.018 / 5032.492
=1.0297

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))
=(296.541 / (296.541 + 2717.554)) / (316.765 / (316.765 + 2871.224))
=0.09838476 / 0.09936201
=0.9902

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)
=(1936.281 / 5182.018) / (1866.853 / 5032.492)
=0.37365385 / 0.37095995
=1.0073

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)
=((2006.943 + 986.523) / 5904.774) / ((1576.604 + 1424.897) / 5626.449)
=0.50695691 / 0.53346276
=0.9503

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
=(358.28 - -4.568 - 705.584) / 5904.774
=-0.058

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 -2.70 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

Mar05Mar06Mar07Mar08Mar09Mar10Mar11Mar12Mar13Mar14
DSRI 1.09320.75721.29290.75630.92951.13822.67721.06211.04290.964
GMI 1.01871.01290.98720.9820.98230.96041.00311.01540.98650.9859
AQI 0.82181.02761.10481.04491.03821.00950.91280.9760.9721.0515
SGI 1.27221.17341.13271.25331.08280.88841.10031.11641.04451.0232
DEPI 0.97030.9671.14150.91990.93260.96720.95310.98850.96440.9884
SGAI 0.98550.95790.98370.98921.01051.06410.97080.98321.01321.0097
LVGI 1.03360.9071.16060.98640.96490.88541.11031.03731.11380.9304
TATA -0.0553-0.0936-0.0419-0.0782-0.0706-0.0849-0.0046-0.0367-0.0399-0.0672
M-score -2.48-2.93-2.29-2.84-2.79-2.84-0.94-2.50-2.65-2.77

Airgas Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 1.03691.05091.01141.04291.03160.9911.00380.9640.96780.9952
GMI 1.01320.99940.9910.98650.98360.98320.98550.98590.98630.9938
AQI 0.95860.95960.98650.9720.99310.99011.03281.05151.04711.0453
SGI 1.10911.08761.07121.04451.02911.03091.02671.02321.02531.0297
DEPI 0.97410.97610.98060.96440.96880.97130.97710.98840.99030.9902
SGAI 0.98741.00761.01021.01321.01961.01141.00821.00971.0091.0073
LVGI 0.91090.91430.97771.11381.10871.10181.05040.93040.94330.9503
TATA -0.0418-0.0459-0.0431-0.0399-0.0438-0.0578-0.0607-0.0672-0.0703-0.058
M-score -2.53-2.56-2.61-2.65-2.68-2.78-2.75-2.77-2.79-2.70
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