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ARRIS Group Inc (NAS:ARRS)
Beneish M-Score
-2.14 (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.

ARRIS Group Inc has a M-score of -2.14 signals that the company is a manipulator.

ARRS' s 10-Year Beneish M-Score Range
Min: -4.27   Max: -0.91
Current: -2.14

-4.27
-0.91

During the past 13 years, the highest Beneish M-Score of ARRIS Group Inc was -0.91. The lowest was -4.27. And the median was -2.51.


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 ARRIS Group 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 * 0.4655+0.528 * 0.9494+0.404 * 1.0523+0.892 * 2.3941+0.115 * 0.4812
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8408+4.679 * -0.0865-0.327 * 0.9196
=-2.14

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $738 Mil.
Revenue was 1429.071 + 1225.017 + 1199.067 + 1067.823 = $4,921 Mil.
Gross Profit was 419.412 + 346.774 + 366.153 + 316.992 = $1,449 Mil.
Total Current Assets was $1,807 Mil.
Total Assets was $4,331 Mil.
Property, Plant and Equipment(Net PPE) was $377 Mil.
Depreciation, Depletion and Amortization(DDA) was $330 Mil.
Selling, General & Admin. Expense(SGA) was $422 Mil.
Total Current Liabilities was $1,179 Mil.
Long-Term Debt was $1,508 Mil.
Net Income was 39.024 + 40.8 + -4.38 + 17.959 = $93 Mil.
Non Operating Income was -8.99 + -3.167 + -4.098 + 2.327 = $-14 Mil.
Cash Flow from Operations was 220.308 + 34.848 + 190.797 + 36.04 = $482 Mil.
Accounts Receivable was $662 Mil.
Revenue was 1000.362 + 353.65 + 344.003 + 357.432 = $2,055 Mil.
Gross Profit was 231.077 + 108.526 + 123.191 + 111.952 = $575 Mil.
Total Current Assets was $2,205 Mil.
Total Assets was $4,935 Mil.
Property, Plant and Equipment(Net PPE) was $404 Mil.
Depreciation, Depletion and Amortization(DDA) was $117 Mil.
Selling, General & Admin. Expense(SGA) was $210 Mil.
Total Current Liabilities was $1,492 Mil.
Long-Term Debt was $1,838 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)
=(738.008 / 4920.978) / (662.156 / 2055.447)
=0.14997181 / 0.32214696
=0.4655

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)
=(346.774 / 2055.447) / (419.412 / 4920.978)
=0.27962093 / 0.29452093
=0.9494

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 - (1806.6 + 376.509) / 4330.82) / (1 - (2205.165 + 404.157) / 4935.209)
=0.49591325 / 0.4712844
=1.0523

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
=4920.978 / 2055.447
=2.3941

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))
=(117.098 / (117.098 + 404.157)) / (329.713 / (329.713 + 376.509))
=0.22464629 / 0.46686877
=0.4812

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)
=(421.845 / 4920.978) / (209.56 / 2055.447)
=0.08572381 / 0.10195349
=0.8408

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)
=((1507.796 + 1179.15) / 4330.82) / ((1837.952 + 1491.798) / 4935.209)
=0.62042431 / 0.6746928
=0.9196

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
=(93.403 - -13.928 - 481.993) / 4330.82
=-0.0865

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.

ARRIS Group Inc has a M-score of -2.14 signals that the company is likely to 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.

ARRIS Group Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.87491.08091.05341.30110.82790.93120.89271.20920.99491.2629
GMI 0.97531.06420.99131.02430.80370.82221.07121.03421.10341.2098
AQI 0.82950.83460.62022.62390.76430.88470.97151.03120.94971.694
SGI 1.12921.38851.31031.11291.15360.96790.98171.00111.24342.6749
DEPI 1.17841.85591.17861.49640.34681.03830.98731.05360.93771.3201
SGAI 0.68110.78080.89561.02921.24981.06480.94521.07920.87230.7838
LVGI 0.80730.47672.44760.74911.00350.91210.86971.14650.97612.4446
TATA -0.10460.0524-0.0030.0051-0.2366-0.1032-0.0387-0.096-0.0231-0.1403
M-score -2.91-1.54-2.76-1.28-3.93-3.17-2.70-2.76-2.32-1.41

ARRIS Group Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 1.1841.04610.85860.99490.92.1691.7121.26291.09810.4655
GMI 0.99891.0421.0791.10341.14191.28551.22541.20981.17240.9494
AQI 1.07571.030.970.94970.83171.48661.68411.6941.86011.0523
SGI 1.0331.12481.20211.24341.24931.7022.14282.67493.19872.3941
DEPI 1.02481.00930.99350.93770.96612.24651.64641.32011.13390.4812
SGAI 1.0550.98610.92390.86950.8530.78820.79930.78380.7670.8408
LVGI 1.25451.20151.16750.97611.0312.4352.44412.44462.14810.9196
TATA -0.1286-0.1286-0.1118-0.0231-0.0324-0.078-0.0905-0.1409-0.1277-0.0865
M-score -2.94-2.96-2.97-2.32-2.48-1.09-1.20-1.41-0.91-2.14
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