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Airgas Inc (NYSE:ARG)
Beneish M-Score
-2.76 (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 -2.76 suggests that the company is not a manipulator.

ARG' s 10-Year Beneish M-Score Range
Min: -3.95   Max: -0.87
Current: -2.76

-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 -2.63.


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 * 1.0038+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
=-2.76

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

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

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)
=(664.966 / 5067.63) / (645.174 / 4935.723)
=0.13121834 / 0.1307152
=1.0038

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)
=(718.958 / 4935.723) / (705.176 / 5067.63)
=0.54766607 / 0.55869095
=0.9803

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 - (1402.373 + 2769.12) / 5755.259) / (1 - (1388.957 + 2674.258) / 5539.061)
=0.27518588 / 0.26644336
=1.0328

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
=5067.63 / 4935.723
=1.0267

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))
=0.09599939 / 0.09824532
=0.9771

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)
=0.37400501 / 0.36805388
=1.0162

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)
=0.5313118 / 0.50580432
=1.0504

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
=(348.568 - -1.106 - 699.072) / 5755.259
=-0.0607

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.


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

Mar04Mar05Mar06Mar07Mar08Mar09Mar10Mar11Mar12Mar13
DSRI 1.44461.08980.74351.29290.75630.92951.13492.68491.06211.0429
GMI 1.00021.02041.01790.98720.98330.98090.95621.00751.01540.9811
AQI 0.88290.83441.02761.10481.04281.0341.01560.91280.9760.972
SGI 1.03831.27621.1951.13271.25331.08280.8911.09711.11641.0445
DEPI 1.07850.96910.96291.14150.91990.93260.96720.95310.98850.9644
SGAI 0.98910.98620.95630.98370.98741.01231.07240.96340.98321.0215
LVGI 0.95051.02170.9071.16060.98820.96420.88441.11031.03731.1138
TATA -0.0683-0.0553-0.0871-0.0443-0.078-0.0702-0.0849-0.0046-0.0367-0.0399
M-score -2.38-2.47-2.90-2.30-2.84-2.79-2.85-0.93-2.50-2.65

Airgas Inc Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 1.03961.07331.06211.03691.05091.01141.04291.03160.9911.0038
GMI 1.01211.0141.01541.01320.99940.9910.98110.97820.9780.9803
AQI 0.97330.95850.9760.95860.95960.98650.9720.99310.99011.0328
SGI 1.11041.11511.11641.10911.08761.07121.04451.02911.03091.0267
DEPI 0.97630.97580.98850.97410.97610.98060.96440.96880.97130.9771
SGAI 0.96440.97540.98320.98741.00761.01021.02151.02781.01951.0162
LVGI 1.17981.19581.03730.91090.91430.97771.11381.10871.10181.0504
TATA -0.0438-0.0468-0.0367-0.0418-0.0459-0.0431-0.0399-0.0438-0.0578-0.0607
M-score -2.61-2.60-2.50-2.53-2.56-2.61-2.65-2.69-2.79-2.76
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