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ARRIS International PLC (NAS:ARRS)
Beneish M-Score
-2.31 (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 International PLC has a M-score of -2.31 suggests that the company is not a manipulator.

ARRS' s Beneish M-Score Range Over the Past 10 Years
Min: -4.27   Max: -0.89
Current: -2.31

-4.27
-0.89

During the past 13 years, the highest Beneish M-Score of ARRIS International PLC was -0.89. 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 International PLC 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 * 1.2124+0.528 * 1.049+0.404 * 1.3058+0.892 * 0.9783+0.115 * 1.0023
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0841+4.679 * -0.0374-0.327 * 0.8926
=-2.31

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $973 Mil.
Revenue was 1614.706 + 1101.682 + 1221.416 + 1260.077 = $5,198 Mil.
Gross Profit was 384.032 + 358.673 + 359.333 + 364.361 = $1,466 Mil.
Total Current Assets was $2,526 Mil.
Total Assets was $7,313 Mil.
Property, Plant and Equipment(Net PPE) was $369 Mil.
Depreciation, Depletion and Amortization(DDA) was $349 Mil.
Selling, General & Admin. Expense(SGA) was $437 Mil.
Total Current Liabilities was $1,528 Mil.
Long-Term Debt was $2,242 Mil.
Net Income was -202.573 + 30.041 + 26.257 + 16.758 = $-130 Mil.
Non Operating Income was -13.85 + -19.404 + -11.462 + 4.315 = $-40 Mil.
Cash Flow from Operations was -222.535 + 119.374 + 215.905 + 71.856 = $185 Mil.
Accounts Receivable was $820 Mil.
Revenue was 1215.158 + 1263.387 + 1405.445 + 1429.071 = $5,313 Mil.
Gross Profit was 336.556 + 380.575 + 435.734 + 419.412 = $1,572 Mil.
Total Current Assets was $2,078 Mil.
Total Assets was $4,473 Mil.
Property, Plant and Equipment(Net PPE) was $326 Mil.
Depreciation, Depletion and Amortization(DDA) was $309 Mil.
Selling, General & Admin. Expense(SGA) was $412 Mil.
Total Current Liabilities was $1,078 Mil.
Long-Term Debt was $1,505 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)
=(972.54 / 5197.881) / (819.918 / 5313.061)
=0.18710317 / 0.15432121
=1.2124

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)
=(1572.277 / 5313.061) / (1466.399 / 5197.881)
=0.29592677 / 0.28211477
=1.049

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 - (2526.437 + 369.255) / 7313.036) / (1 - (2077.969 + 325.727) / 4472.786)
=0.60403696 / 0.46259535
=1.3058

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
=5197.881 / 5313.061
=0.9783

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))
=(309.48 / (309.48 + 325.727)) / (349.271 / (349.271 + 369.255))
=0.48721126 / 0.48609375
=1.0023

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)
=(436.723 / 5197.881) / (411.76 / 5313.061)
=0.08401943 / 0.07749958
=1.0841

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)
=((2242.071 + 1527.729) / 7313.036) / ((1505.073 + 1077.902) / 4472.786)
=0.51549042 / 0.57748683
=0.8926

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
=(-129.517 - -40.401 - 184.6) / 7313.036
=-0.0374

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 International PLC has a M-score of -2.31 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 International PLC Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 1.05341.30110.82790.93120.89271.20920.99491.22830.65721.2081
GMI 0.99131.02430.80370.82221.07121.03421.10341.20980.95011.0054
AQI 0.62022.62390.76430.88470.97151.03120.94971.6940.91440.9766
SGI 1.31031.11291.15360.96790.98171.00111.24342.67491.47010.9014
DEPI 1.17861.40040.37061.03830.98731.05360.93771.32010.84640.9393
SGAI 0.89561.02921.24981.06480.94521.07920.87230.78380.82571.1269
LVGI 2.44760.74911.00350.91210.86971.14650.97612.44460.87650.9817
TATA -0.0030.0051-0.2318-0.1032-0.0387-0.096-0.0231-0.1403-0.0208-0.0478
M-score -2.76-1.29-3.90-3.17-2.70-2.76-2.32-1.44-2.48-2.63

ARRIS International PLC Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 1.22831.09810.46550.58940.65720.9571.01870.9761.20811.2124
GMI 1.20981.17240.94910.94510.95010.94860.99861.02671.00541.049
AQI 1.6941.86011.05230.96120.91440.91160.95160.94930.97661.3058
SGI 2.67493.19872.39411.90131.47011.18271.04530.94320.90140.9783
DEPI 1.32011.13390.4740.66940.84640.93480.96430.95560.93931.0023
SGAI 0.78380.7670.84010.82440.82570.87640.92231.00851.12691.0841
LVGI 2.44462.14810.91960.90540.87650.910.91030.93030.98170.8926
TATA -0.1384-0.1234-0.0826-0.0823-0.0208-0.00360.0212-0.0141-0.0478-0.0374
M-score -1.43-0.89-2.13-2.46-2.48-2.39-2.30-2.61-2.63-2.31
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