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Airgas Inc (NYSE:ARG)
Beneish M-Score
-2.88 (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 -2.88 suggests that the company is not a manipulator.

ARG' s Beneish M-Score Range Over the Past 10 Years
Min: -3.57   Max: -0.93
Current: -2.88

-3.57
-0.93

During the past 13 years, the highest Beneish M-Score of Airgas Inc was -0.93. The lowest was -3.57. 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 * 0.9408+0.528 * 0.9807+0.404 * 1.0065+0.892 * 1.0017+0.115 * 0.979
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0307+4.679 * -0.0677-0.327 * 1.0498
=-2.88

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $667 Mil.
Revenue was 1294.084 + 1295.414 + 1374.569 + 1349.71 = $5,314 Mil.
Gross Profit was 744.407 + 741.832 + 773.396 + 752.544 = $3,012 Mil.
Total Current Assets was $1,384 Mil.
Total Assets was $6,135 Mil.
Property, Plant and Equipment(Net PPE) was $3,091 Mil.
Depreciation, Depletion and Amortization(DDA) was $353 Mil.
Selling, General & Admin. Expense(SGA) was $2,043 Mil.
Total Current Liabilities was $1,148 Mil.
Long-Term Debt was $1,955 Mil.
Net Income was 77.367 + 73.864 + 98.034 + 88.235 = $338 Mil.
Non Operating Income was 3.224 + 4.316 + 0.112 + 1.425 = $9 Mil.
Cash Flow from Operations was 231.411 + 140.863 + 147.918 + 223.743 = $744 Mil.
Accounts Receivable was $708 Mil.
Revenue was 1301.723 + 1331.82 + 1357.755 + 1313.587 = $5,305 Mil.
Gross Profit was 718.721 + 742.887 + 757.221 + 730.181 = $2,949 Mil.
Total Current Assets was $1,416 Mil.
Total Assets was $5,974 Mil.
Property, Plant and Equipment(Net PPE) was $2,952 Mil.
Depreciation, Depletion and Amortization(DDA) was $329 Mil.
Selling, General & Admin. Expense(SGA) was $1,979 Mil.
Total Current Liabilities was $1,129 Mil.
Long-Term Debt was $1,749 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)
=(667.399 / 5313.777) / (708.227 / 5304.885)
=0.12559786 / 0.13350468
=0.9408

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)
=(2949.01 / 5304.885) / (3012.179 / 5313.777)
=0.5559046 / 0.56686214
=0.9807

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 - (1384.198 + 3090.543) / 6134.956) / (1 - (1415.684 + 2951.766) / 5973.61)
=0.27061563 / 0.26887594
=1.0065

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
=5313.777 / 5304.885
=1.0017

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))
=(329.058 / (329.058 + 2951.766)) / (352.747 / (352.747 + 3090.543))
=0.10029736 / 0.10244475
=0.979

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)
=(2042.754 / 5313.777) / (1978.674 / 5304.885)
=0.38442599 / 0.37299093
=1.0307

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)
=((1954.82 + 1147.834) / 6134.956) / ((1748.662 + 1129.047) / 5973.61)
=0.5057337 / 0.48173701
=1.0498

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
=(337.5 - 9.077 - 743.935) / 6134.956
=-0.0677

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 -2.88 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 local exchange's currency.

Airgas Inc Annual Data

Mar07Mar08Mar09Mar10Mar11Mar12Mar13Mar14Mar15Mar16
DSRI 1.29290.75630.92951.13822.67721.06211.04290.9640.9660.9408
GMI 0.98720.9820.98230.96041.00341.0150.98110.99131.00180.9807
AQI 1.10481.04281.0341.01560.91280.9760.9721.05150.97861.0065
SGI 1.13271.25331.08280.88841.10031.11641.04451.02321.04581.0017
DEPI 1.14150.91990.93260.96720.95310.98850.96440.98840.97950.979
SGAI 0.98370.98921.01051.06410.97080.98321.02151.00151.00151.0307
LVGI 1.16060.98820.96420.88441.11031.03731.11380.93040.91881.0498
TATA -0.0419-0.078-0.0702-0.0849-0.0047-0.0367-0.0399-0.0672-0.0594-0.0677
M-score -2.29-2.84-2.79-2.84-0.94-2.50-2.65-2.77-2.73-2.88

Airgas Inc Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 1.00380.9640.96780.99521.00160.9660.96120.96860.96020.9408
GMI 0.98550.98590.98630.99381.00091.00181.00350.99980.98940.9807
AQI 1.03281.05151.04711.04530.97620.97860.97910.99881.00431.0065
SGI 1.02671.02321.02531.02971.04011.04581.0461.03391.00961.0017
DEPI 0.97710.98840.99030.99020.98280.97950.99160.99340.98740.979
SGAI 1.00821.00971.0091.00731.00211.00150.99981.00541.02211.0307
LVGI 1.05040.93040.94330.95030.93560.91880.95881.06011.05191.0498
TATA -0.0607-0.0672-0.0703-0.058-0.0566-0.0594-0.0631-0.0625-0.061-0.0677
M-score -2.75-2.77-2.79-2.70-2.70-2.73-2.76-2.79-2.82-2.88
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