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Airgas Inc (NYSE:ARG)
Beneish M-Score
-2.73 (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 -2.73 suggests that the company is not a manipulator.

ARG' s 10-Year Beneish M-Score Range
Min: -3.57   Max: -0.93
Current: -2.73

-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 -2.67.


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 * 0.966+0.528 * 1.0018+0.404 * 0.9786+0.892 * 1.0458+0.115 * 0.9795
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0015+4.679 * -0.0594-0.327 * 0.9188
=-2.73

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

This Year (Mar15) TTM:Last Year (Mar14) TTM:
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.
Net Income was 87.723 + 93.199 + 98.312 + 88.852 = $368 Mil.
Non Operating Income was 3.363 + -0.238 + 0.081 + 1.869 = $5 Mil.
Cash Flow from Operations was 203.353 + 172.766 + 144.946 + 196.972 = $718 Mil.
Accounts Receivable was $701 Mil.
Revenue was 1267.83 + 1242.846 + 1281.97 + 1279.891 = $5,073 Mil.
Gross Profit was 696.481 + 705.176 + 718.958 + 704.348 = $2,825 Mil.
Total Current Assets was $1,399 Mil.
Total Assets was $5,793 Mil.
Property, Plant and Equipment(Net PPE) was $2,802 Mil.
Depreciation, Depletion and Amortization(DDA) was $305 Mil.
Selling, General & Admin. Expense(SGA) was $1,889 Mil.
Total Current Liabilities was $1,331 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)
=(708.227 / 5304.885) / (701.06 / 5072.537)
=0.13350468 / 0.13820698
=0.966

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)
=(742.887 / 5072.537) / (718.721 / 5304.885)
=0.55691324 / 0.5559046
=1.0018

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 - (1415.684 + 2951.766) / 5973.61) / (1 - (1399.087 + 2802.415) / 5793.314)
=0.26887594 / 0.27476708
=0.9786

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
=5304.885 / 5072.537
=1.0458

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))
=(305.306 / (305.306 + 2802.415)) / (329.058 / (329.058 + 2951.766))
=0.09824112 / 0.10029736
=0.9795

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)
=(1978.674 / 5304.885) / (1889.123 / 5072.537)
=0.37299093 / 0.37242173
=1.0015

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)
=((1748.662 + 1129.047) / 5973.61) / ((1706.774 + 1330.775) / 5793.314)
=0.48173701 / 0.52431976
=0.9188

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
=(368.086 - 5.075 - 718.037) / 5973.61
=-0.0594

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 -2.73 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

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 1.01141.04291.03160.9911.00380.9640.96780.99521.00160.966
GMI 0.9910.98650.98360.98320.98550.98590.98630.99381.00091.0018
AQI 0.98650.9720.99310.99011.03281.05151.04711.04530.97620.9786
SGI 1.07121.04451.02911.03091.02671.02321.02531.02971.04011.0458
DEPI 0.98060.96440.96880.97130.97710.98840.99030.99020.98280.9795
SGAI 1.01021.01321.01961.01141.00821.00971.0091.00731.00211.0015
LVGI 0.97771.11381.10871.10181.05040.93040.94330.95030.93560.9188
TATA -0.0431-0.0399-0.0438-0.0578-0.0607-0.0672-0.0703-0.058-0.0566-0.0594
M-score -2.61-2.65-2.68-2.78-2.75-2.77-2.79-2.70-2.70-2.73
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