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ARRIS Group Inc (NAS:ARRS)
Beneish M-Score
-2.39 (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 -2.39 suggests that the company is not a manipulator.

ARRS' s 10-Year Beneish M-Score Range
Min: -4.27   Max: -0.89
Current: -2.39

-4.27
-0.89

During the past 13 years, the highest Beneish M-Score of ARRIS Group Inc was -0.89. The lowest was -4.27. And the median was -2.49.


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 * 0.957+0.528 * 0.9486+0.404 * 0.9116+0.892 * 1.1827+0.115 * 0.9348
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8764+4.679 * -0.0036-0.327 * 0.91
=-2.39

* 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 $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.
Net Income was 19.126 + 192.76 + 54.626 + 39.024 = $306 Mil.
Non Operating Income was -8.792 + -20.225 + -9.412 + -8.99 = $-47 Mil.
Cash Flow from Operations was -63.263 + 122.19 + 81.935 + 228.163 = $369 Mil.
Accounts Receivable was $724 Mil.
Revenue was 1225.017 + 1199.067 + 1067.824 + 1000.362 = $4,492 Mil.
Gross Profit was 346.774 + 366.371 + 316.895 + 230.957 = $1,261 Mil.
Total Current Assets was $1,752 Mil.
Total Assets was $4,345 Mil.
Property, Plant and Equipment(Net PPE) was $389 Mil.
Depreciation, Depletion and Amortization(DDA) was $325 Mil.
Selling, General & Admin. Expense(SGA) was $397 Mil.
Total Current Liabilities was $1,080 Mil.
Long-Term Debt was $1,678 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)
=(819.918 / 5313.061) / (724.43 / 4492.27)
=0.15432121 / 0.16126146
=0.957

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)
=(380.575 / 4492.27) / (336.556 / 5313.061)
=0.28070374 / 0.29592677
=0.9486

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 - (2077.969 + 325.727) / 4472.786) / (1 - (1751.582 + 388.653) / 4345.029)
=0.46259535 / 0.50742906
=0.9116

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
=5313.061 / 4492.27
=1.1827

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))
=(325.036 / (325.036 + 388.653)) / (309.48 / (309.48 + 325.727))
=0.45543087 / 0.48721126
=0.9348

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)
=(411.76 / 5313.061) / (397.258 / 4492.27)
=0.07749958 / 0.08843146
=0.8764

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)
=((1505.073 + 1077.902) / 4472.786) / ((1677.712 + 1079.627) / 4345.029)
=0.57748683 / 0.63459622
=0.91

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
=(305.536 - -47.419 - 369.025) / 4472.786
=-0.0036

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 -2.39 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.08091.05341.30110.82790.93120.89271.20920.99491.22830.6572
GMI 1.06420.99131.02430.80370.82221.07121.03421.10341.20980.9501
AQI 0.83460.62022.62390.76430.88470.97151.03120.94971.6940.917
SGI 1.38851.31031.11291.15360.96790.98171.00111.24342.67491.4701
DEPI 1.85591.17861.49640.34681.03830.98731.05360.93771.32010.8464
SGAI 0.78080.89561.02921.24981.06480.94521.07920.87230.78380.8257
LVGI 0.47672.44760.74911.00350.91210.86971.14650.97612.44460.8803
TATA 0.0524-0.0030.0051-0.2366-0.1032-0.0387-0.096-0.0231-0.1384-0.0207
M-score -1.54-2.76-1.28-3.93-3.17-2.70-2.76-2.32-1.43-2.48

ARRIS Group Inc Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 0.99490.92.1691.7121.22831.09810.46550.58940.65720.957
GMI 1.10341.14191.28581.22581.20981.17240.94910.94510.95010.9486
AQI 0.94970.83171.48661.68411.6941.86011.05230.96120.9170.9116
SGI 1.24341.24931.7022.14282.67493.19872.39411.90131.47011.1827
DEPI 0.93770.96612.27391.63681.32011.13390.4740.66940.84640.9348
SGAI 0.86950.8530.78870.80.78380.7670.84010.82440.82570.8764
LVGI 0.97611.0312.4352.44412.44462.14810.91960.90540.88030.91
TATA -0.0231-0.0324-0.0777-0.0903-0.1384-0.1234-0.0845-0.0842-0.0207-0.0036
M-score -2.32-2.48-1.08-1.20-1.43-0.89-2.14-2.47-2.48-2.39
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