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Airgas Inc (NYSE:ARG)
Beneish M-Score
-2.82 (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 -2.82 suggests that the company is not a manipulator.

ARG' s Beneish M-Score Range Over the Past 10 Years
Min: -3.95   Max: -0.87
Current: -2.82

-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 -2.68.


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 * 0.9602+0.528 * 0.9894+0.404 * 1.0043+0.892 * 1.0096+0.115 * 0.9874
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0221+4.679 * -0.061-0.327 * 1.0519
=-2.82

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

This Year (Dec15) TTM:Last Year (Dec14) TTM:
Accounts Receivable was $672 Mil.
Revenue was 1295.414 + 1374.569 + 1349.71 + 1301.723 = $5,321 Mil.
Gross Profit was 741.832 + 773.396 + 752.544 + 718.721 = $2,986 Mil.
Total Current Assets was $1,434 Mil.
Total Assets was $6,181 Mil.
Property, Plant and Equipment(Net PPE) was $3,079 Mil.
Depreciation, Depletion and Amortization(DDA) was $347 Mil.
Selling, General & Admin. Expense(SGA) was $2,022 Mil.
Total Current Liabilities was $1,278 Mil.
Long-Term Debt was $1,953 Mil.
Net Income was 73.864 + 98.034 + 88.235 + 87.723 = $348 Mil.
Non Operating Income was 4.316 + 0.112 + 1.425 + 3.363 = $9 Mil.
Cash Flow from Operations was 140.863 + 147.918 + 223.743 + 203.353 = $716 Mil.
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.



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)
=(671.507 / 5321.416) / (692.748 / 5270.992)
=0.12618953 / 0.13142649
=0.9602

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)
=(773.396 / 5270.992) / (741.832 / 5321.416)
=0.55525981 / 0.56122149
=0.9894

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 - (1434.447 + 3078.892) / 6180.874) / (1 - (1474.474 + 2906.363) / 5989.981)
=0.26978952 / 0.26863925
=1.0043

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
=5321.416 / 5270.992
=1.0096

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))
=(322.787 / (322.787 + 2906.363)) / (346.785 / (346.785 + 3078.892))
=0.09996036 / 0.10123109
=0.9874

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)
=(2022.475 / 5321.416) / (1960.003 / 5270.992)
=0.38006331 / 0.37184708
=1.0221

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)
=((1953.45 + 1278.35) / 6180.874) / ((1757.978 + 1219.611) / 5989.981)
=0.52287104 / 0.4970949
=1.0519

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
=(347.856 - 9.216 - 715.877) / 6180.874
=-0.061

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 -2.82 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

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 0.9911.00380.9640.96780.99521.00160.9660.96120.96860.9602
GMI 0.98320.98550.98590.98630.99381.00091.00181.00350.99980.9894
AQI 0.99011.03281.05151.04711.04530.97620.97860.97910.99881.0043
SGI 1.03091.02671.02321.02531.02971.04011.04581.0461.03391.0096
DEPI 0.97130.97710.98840.99030.99020.98280.97950.99160.99340.9874
SGAI 1.01141.00821.00971.0091.00731.00211.00150.99981.00541.0221
LVGI 1.10181.05040.93040.94330.95030.93560.91880.95881.06011.0519
TATA -0.0578-0.0607-0.0672-0.0703-0.058-0.0566-0.0594-0.0631-0.0625-0.061
M-score -2.78-2.75-2.77-2.79-2.70-2.70-2.73-2.76-2.79-2.82
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