Switch to:
ARRIS International PLC (NAS:ARRS)
Beneish M-Score
-2.63 (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 -2.63 suggests that the company is not a manipulator.

ARRS' s Beneish M-Score Range Over the Past 10 Years
Min: -4.14   Max: -1.27
Current: -2.63

-4.14
-1.27

During the past 13 years, the highest Beneish M-Score of ARRIS International PLC was -1.27. The lowest was -4.14. And the median was -2.67.


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 * 1.2081+0.528 * 1.0054+0.404 * 0.9766+0.892 * 0.9014+0.115 * 0.9393
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1269+4.679 * -0.0478-0.327 * 0.9817
=-2.63

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

This Year (Dec15) TTM:Last Year (Dec14) TTM:
Accounts Receivable was $652 Mil.
Revenue was 1101.682 + 1221.416 + 1260.077 + 1215.158 = $4,798 Mil.
Gross Profit was 358.673 + 359.333 + 364.361 + 336.556 = $1,419 Mil.
Total Current Assets was $2,110 Mil.
Total Assets was $4,524 Mil.
Property, Plant and Equipment(Net PPE) was $312 Mil.
Depreciation, Depletion and Amortization(DDA) was $303 Mil.
Selling, General & Admin. Expense(SGA) was $417 Mil.
Total Current Liabilities was $1,013 Mil.
Long-Term Debt was $1,496 Mil.
Net Income was 30.041 + 26.257 + 16.758 + 19.126 = $92 Mil.
Non Operating Income was -19.404 + -11.462 + 4.315 + -8.792 = $-35 Mil.
Cash Flow from Operations was 119.374 + 215.905 + 71.856 + -63.263 = $344 Mil.
Accounts Receivable was $599 Mil.
Revenue was 1263.387 + 1405.445 + 1429.071 + 1225.017 = $5,323 Mil.
Gross Profit was 380.575 + 435.734 + 419.412 + 346.774 = $1,582 Mil.
Total Current Assets was $1,910 Mil.
Total Assets was $4,341 Mil.
Property, Plant and Equipment(Net PPE) was $366 Mil.
Depreciation, Depletion and Amortization(DDA) was $316 Mil.
Selling, General & Admin. Expense(SGA) was $411 Mil.
Total Current Liabilities was $1,004 Mil.
Long-Term Debt was $1,449 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)
=(651.893 / 4798.333) / (598.603 / 5322.92)
=0.13585822 / 0.11245764
=1.2081

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)
=(359.333 / 5322.92) / (358.673 / 4798.333)
=0.29729829 / 0.29571166
=1.0054

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 - (2110.203 + 312.311) / 4523.516) / (1 - (1910.113 + 366.431) / 4341.042)
=0.46446216 / 0.4755766
=0.9766

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
=4798.333 / 5322.92
=0.9014

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))
=(315.739 / (315.739 + 366.431)) / (303.37 / (303.37 + 312.311))
=0.46284504 / 0.49273893
=0.9393

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)
=(417.084 / 4798.333) / (410.568 / 5322.92)
=0.08692269 / 0.0771321
=1.1269

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)
=((1496.243 + 1012.63) / 4523.516) / ((1448.96 + 1003.677) / 4341.042)
=0.55462897 / 0.56498808
=0.9817

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
=(92.182 - -35.343 - 343.872) / 4523.516
=-0.0478

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 -2.63 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 1.17861.49640.34681.03830.98731.05360.93771.32010.84640.9393
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 -0.0030.0051-0.2366-0.1032-0.0387-0.096-0.0231-0.1384-0.0208-0.0478
M-score -2.76-1.28-3.93-3.17-2.70-2.76-2.32-1.43-2.48-2.63

ARRIS International PLC Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 1.7121.22831.09810.46550.58940.65720.9571.01870.9761.2081
GMI 1.22581.20981.17240.94910.94510.95010.94860.99861.02671.0054
AQI 1.68411.6941.86011.05230.96120.91440.91160.95160.94930.9766
SGI 2.14282.67493.19872.39411.90131.47011.18271.04530.94320.9014
DEPI 1.63681.32011.13390.4740.66940.84640.93480.96430.95560.9393
SGAI 0.80.78380.7670.84010.82440.82570.87640.92231.00851.1269
LVGI 2.44412.44462.14810.91960.90540.87650.910.91030.93030.9817
TATA -0.0903-0.1384-0.1234-0.0826-0.0823-0.0208-0.00360.0212-0.0141-0.0478
M-score -1.20-1.43-0.89-2.13-2.46-2.48-2.39-2.30-2.61-2.63
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)

GuruFocus Premium Plus Membership

FEEDBACK