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ARRIS Group Inc (NAS:ARRS)
Beneish M-Score
-1.40 (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 -1.40 signals that the company is a manipulator.

ARRS' s 10-Year Beneish M-Score Range
Min: -4.07   Max: -1.26
Current: -1.4

-4.07
-1.26

During the past 13 years, the highest Beneish M-Score of ARRIS Group Inc was -1.26. The lowest was -4.07. And the median was -2.70.


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 * 1.2771+0.528 * 1.2098+0.404 * 1.694+0.892 * 2.6749+0.115 * 1.3201
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.7838+4.679 * -0.1409-0.327 * 2.4446
=-1.40

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $645 Mil.
Revenue was 1199.067 + 1067.823 + 1000.362 + 353.65 = $3,621 Mil.
Gross Profit was 366.153 + 316.992 + 231.077 + 108.526 = $1,023 Mil.
Total Current Assets was $1,678 Mil.
Total Assets was $4,322 Mil.
Property, Plant and Equipment(Net PPE) was $396 Mil.
Depreciation, Depletion and Amortization(DDA) was $255 Mil.
Selling, General & Admin. Expense(SGA) was $338 Mil.
Total Current Liabilities was $1,095 Mil.
Long-Term Debt was $1,691 Mil.
Net Income was -4.38 + 17.959 + -50.277 + -14.65 = $-51 Mil.
Non Operating Income was -4.098 + 2.327 + 8.257 + -19.673 = $-13 Mil.
Cash Flow from Operations was 190.797 + 36.04 + 293.952 + 50.057 = $571 Mil.
Accounts Receivable was $189 Mil.
Revenue was 344.003 + 357.432 + 349.327 + 302.901 = $1,354 Mil.
Gross Profit was 123.191 + 111.952 + 118.526 + 108.908 = $463 Mil.
Total Current Assets was $920 Mil.
Total Assets was $1,406 Mil.
Property, Plant and Equipment(Net PPE) was $54 Mil.
Depreciation, Depletion and Amortization(DDA) was $58 Mil.
Selling, General & Admin. Expense(SGA) was $161 Mil.
Total Current Liabilities was $371 Mil.
Long-Term Debt was $0 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)
=(645.425 / 3620.902) / (188.931 / 1353.663)
=0.17824978 / 0.13957019
=1.2771

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)
=(316.992 / 1353.663) / (366.153 / 3620.902)
=0.34172242 / 0.28245669
=1.2098

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 - (1678.044 + 396.152) / 4322.007) / (1 - (919.892 + 54.378) / 1405.894)
=0.520085 / 0.30701034
=1.694

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
=3620.902 / 1353.663
=2.6749

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))
=(58.247 / (58.247 + 54.378)) / (255.153 / (255.153 + 396.152))
=0.51717647 / 0.39175655
=1.3201

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)
=(338.251 / 3620.902) / (161.339 / 1353.663)
=0.09341623 / 0.11918698
=0.7838

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)
=((1691.034 + 1095.027) / 4322.007) / ((0 + 370.721) / 1405.894)
=0.64462205 / 0.26369058
=2.4446

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
=(-51.348 - -13.187 - 570.846) / 4322.007
=-0.1409

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 -1.40 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 0.86191.07651.0731.30590.8310.94280.90061.21580.94251.2771
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 -2.92-1.54-2.74-1.27-3.92-3.16-2.69-2.75-2.37-1.39

ARRIS Group Inc Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 1.16291.21581.17541.05160.83480.94250.89172.18781.79881.2771
GMI 1.10591.03420.99891.0421.0791.10341.14191.28551.22541.2098
AQI 0.98191.03121.07571.030.970.94970.83171.48661.68411.694
SGI 0.95761.00111.0331.12481.20211.24341.24931.7022.14282.6749
DEPI 1.0041.05361.02481.00930.99350.93770.96612.24651.64641.3201
SGAI 1.05541.08261.0550.98610.92390.86950.8530.78820.79930.7838
LVGI 0.93371.14651.25451.20151.16750.97611.0312.4352.44412.4446
TATA -0.0161-0.096-0.1286-0.1286-0.1118-0.0231-0.0324-0.078-0.0905-0.1409
M-score -2.38-2.75-2.95-2.95-2.99-2.37-2.49-1.07-1.12-1.40
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