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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: -3.95   Max: -0.87
Current: -2.7

-3.95
-0.87

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 -2.66.


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 * 1.0016+0.528 * 1.0009+0.404 * 0.9762+0.892 * 1.0401+0.115 * 0.9828
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0021+4.679 * -0.0566-0.327 * 0.9356
=-2.70

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $693 Mil.
Revenue was 1331.82 + 1357.755 + 1313.587 + 1267.83 = $5,271 Mil.
Gross Profit was 742.887 + 757.221 + 730.181 + 696.481 = $2,927 Mil.
Total Current Assets was $1,474 Mil.
Total Assets was $5,990 Mil.
Property, Plant and Equipment(Net PPE) was $2,906 Mil.
Depreciation, Depletion and Amortization(DDA) was $323 Mil.
Selling, General & Admin. Expense(SGA) was $1,960 Mil.
Total Current Liabilities was $1,220 Mil.
Long-Term Debt was $1,758 Mil.
Net Income was 93.199 + 98.312 + 88.852 + 88.357 = $369 Mil.
Non Operating Income was -0.238 + 0.081 + 1.869 + 0.34 = $2 Mil.
Cash Flow from Operations was 172.766 + 144.946 + 196.972 + 190.998 = $706 Mil.
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 + 687.803 = $2,816 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 $1,880 Mil.
Total Current Liabilities was $1,353 Mil.
Long-Term Debt was $1,705 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)
=(692.748 / 5270.992) / (664.966 / 5067.63)
=0.13142649 / 0.13121834
=1.0016

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)
=(757.221 / 5067.63) / (742.887 / 5270.992)
=0.55574006 / 0.55525981
=1.0009

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 - (1474.474 + 2906.363) / 5989.981) / (1 - (1402.373 + 2769.12) / 5755.259)
=0.26863925 / 0.27518588
=0.9762

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
=5270.992 / 5067.63
=1.0401

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))
=(301.693 / (301.693 + 2769.12)) / (322.787 / (322.787 + 2906.363))
=0.09824532 / 0.09996036
=0.9828

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)
=(1960.003 / 5270.992) / (1880.365 / 5067.63)
=0.37184708 / 0.37105412
=1.0021

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)
=((1757.978 + 1219.611) / 5989.981) / ((1704.744 + 1353.093) / 5755.259)
=0.4970949 / 0.5313118
=0.9356

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
=(368.72 - 2.052 - 705.682) / 5989.981
=-0.0566

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 1.08980.74351.29290.75630.92951.13492.68491.06211.04290.964
GMI 1.02041.01790.98720.98330.98090.95621.00751.01540.98650.9859
AQI 0.83441.02761.10481.04281.0341.01560.91280.9760.9721.0515
SGI 1.27621.1951.13271.25331.08280.8911.09711.11641.04451.0232
DEPI 0.96910.96291.14150.91990.93260.96720.95310.98850.96440.9884
SGAI 0.98620.95630.98370.98741.01231.07240.96340.98321.01321.0097
LVGI 1.02170.9071.16060.98820.96420.88441.11031.03731.11380.9304
TATA -0.0553-0.0871-0.0443-0.078-0.0702-0.0849-0.0046-0.0367-0.0399-0.0672
M-score -2.47-2.90-2.30-2.84-2.79-2.85-0.93-2.50-2.65-2.77

Airgas Inc Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 1.05091.01141.04291.03160.9911.00380.9640.96780.99521.0016
GMI 0.99940.9910.98650.98360.98320.98550.98590.98630.99381.0009
AQI 0.95960.98650.9720.99310.99011.03281.05151.04711.04530.9762
SGI 1.08761.07121.04451.02911.03091.02671.02321.02531.02971.0401
DEPI 0.97610.98060.96440.96880.97130.97710.98840.99030.99020.9828
SGAI 1.00761.01021.01321.01961.01141.00821.00971.0091.00731.0021
LVGI 0.91430.97771.11381.10871.10181.05040.93040.94330.95030.9356
TATA -0.0459-0.0431-0.0399-0.0438-0.0578-0.0607-0.0672-0.0703-0.058-0.0566
M-score -2.56-2.61-2.65-2.68-2.78-2.75-2.77-2.79-2.70-2.70
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