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ARRIS Group Inc (NAS:ARRS)
Beneish M-Score
-2.48 (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 -2.48 suggests that the company is not a manipulator.

ARRS' s 10-Year Beneish M-Score Range
Min: -4.27   Max: -0.9
Current: -2.48

-4.27
-0.9

During the past 13 years, the highest Beneish M-Score of ARRIS Group Inc was -0.90. 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 * 0.5894+0.528 * 0.9451+0.404 * 0.9612+0.892 * 1.9013+0.115 * 0.6694
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8244+4.679 * -0.086-0.327 * 0.9054
=-2.48

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $704 Mil.
Revenue was 1405.445 + 1429.071 + 1225.017 + 1199.067 = $5,259 Mil.
Gross Profit was 435.734 + 419.412 + 346.774 + 366.371 = $1,568 Mil.
Total Current Assets was $1,848 Mil.
Total Assets was $4,305 Mil.
Property, Plant and Equipment(Net PPE) was $371 Mil.
Depreciation, Depletion and Amortization(DDA) was $324 Mil.
Selling, General & Admin. Expense(SGA) was $426 Mil.
Total Current Liabilities was $1,122 Mil.
Long-Term Debt was $1,488 Mil.
Net Income was 54.626 + 39.024 + 40.8 + -2.817 = $132 Mil.
Non Operating Income was -9.412 + -8.99 + -3.167 + -4.098 = $-26 Mil.
Cash Flow from Operations was 81.935 + 220.308 + 34.848 + 190.648 = $528 Mil.
Accounts Receivable was $628 Mil.
Revenue was 1067.824 + 1000.362 + 353.65 + 344.003 = $2,766 Mil.
Gross Profit was 316.895 + 230.957 + 108.526 + 123.191 = $780 Mil.
Total Current Assets was $1,865 Mil.
Total Assets was $4,586 Mil.
Property, Plant and Equipment(Net PPE) was $410 Mil.
Depreciation, Depletion and Amortization(DDA) was $186 Mil.
Selling, General & Admin. Expense(SGA) was $271 Mil.
Total Current Liabilities was $1,247 Mil.
Long-Term Debt was $1,823 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)
=(703.566 / 5258.6) / (627.844 / 2765.839)
=0.13379341 / 0.22699947
=0.5894

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)
=(419.412 / 2765.839) / (435.734 / 5258.6)
=0.28185625 / 0.29823356
=0.9451

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 - (1848.388 + 371.496) / 4305.244) / (1 - (1865.029 + 410.047) / 4585.954)
=0.48437673 / 0.50390344
=0.9612

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
=5258.6 / 2765.839
=1.9013

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))
=(185.855 / (185.855 + 410.047)) / (324.063 / (324.063 + 371.496))
=0.31188853 / 0.46590296
=0.6694

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)
=(425.552 / 5258.6) / (271.485 / 2765.839)
=0.08092496 / 0.09815647
=0.8244

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)
=((1487.585 + 1121.934) / 4305.244) / ((1822.941 + 1247.213) / 4585.954)
=0.60612569 / 0.66946899
=0.9054

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
=(131.633 - -25.667 - 527.739) / 4305.244
=-0.086

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 -2.48 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.

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

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 1.04610.85860.99490.92.1691.7121.26291.09810.46550.5894
GMI 1.0421.0791.10341.14191.28581.22581.20981.17240.94910.9451
AQI 1.030.970.94970.83171.48661.68411.6941.86011.05230.9612
SGI 1.12481.20211.24341.24931.7022.14282.67493.19872.39411.9013
DEPI 1.00930.99350.93770.96612.27391.63681.32011.13390.4740.6694
SGAI 0.98610.92390.86950.8530.78870.80.78380.7670.84010.8244
LVGI 1.20151.16750.97611.0312.4352.44412.44462.14810.91960.9054
TATA -0.1286-0.1118-0.0231-0.0324-0.0777-0.0903-0.1403-0.1271-0.0863-0.086
M-score -2.96-2.97-2.32-2.48-1.08-1.20-1.41-0.90-2.14-2.48
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