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ARRIS Group Inc (NAS:ARRS)
Beneish M-Score
-2.50 (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 -2.50 suggests that the company is not a manipulator.

ARRS' s 10-Year Beneish M-Score Range
Min: -4.14   Max: -1.27
Current: -2.5

-4.14
-1.27

During the past 13 years, the highest Beneish M-Score of ARRIS Group Inc was -1.27. The lowest was -4.14. And the median was -2.69.


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 * 0.6392+0.528 * 0.9501+0.404 * 0.917+0.892 * 1.4701+0.115 * 0.8464
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8257+4.679 * -0.0207-0.327 * 0.8803
=-2.50

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
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 $1,917 Mil.
Total Assets was $4,366 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 $1,010 Mil.
Long-Term Debt was $1,467 Mil.
Net Income was 192.76 + 54.626 + 39.024 + 40.8 = $327 Mil.
Non Operating Income was -20.225 + -9.412 + -8.99 + -3.167 = $-42 Mil.
Cash Flow from Operations was 122.19 + 81.935 + 220.308 + 34.848 = $459 Mil.
Accounts Receivable was $637 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.



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)
=(598.603 / 5322.92) / (637.059 / 3620.902)
=0.11245764 / 0.17593931
=0.6392

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)
=(435.734 / 3620.902) / (380.575 / 5322.92)
=0.28245669 / 0.29729829
=0.9501

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 - (1917.272 + 366.431) / 4365.645) / (1 - (1678.044 + 396.152) / 4322.007)
=0.47689219 / 0.520085
=0.917

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
=5322.92 / 3620.902
=1.4701

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))
=(255.153 / (255.153 + 396.152)) / (315.739 / (315.739 + 366.431))
=0.39175655 / 0.46284504
=0.8464

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)
=(410.568 / 5322.92) / (338.251 / 3620.902)
=0.0771321 / 0.09341623
=0.8257

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)
=((1467.37 + 1009.87) / 4365.645) / ((1691.034 + 1095.027) / 4322.007)
=0.56743963 / 0.64462205
=0.8803

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
=(327.21 - -41.794 - 459.281) / 4365.645
=-0.0207

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 -2.50 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 1.08091.05341.30110.82790.93120.89271.20920.99491.26290.6392
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 0.47672.44760.74911.00350.94590.83861.14650.97612.44460.8803
TATA 0.0524-0.0030.0051-0.2366-0.1032-0.0387-0.096-0.0231-0.1403-0.0207
M-score -1.54-2.76-1.28-3.93-3.18-2.69-2.76-2.32-1.41-2.50

ARRIS Group Inc Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 0.85860.99490.92.1691.7121.26291.09810.46550.58940.6392
GMI 1.0791.10341.14191.28551.22541.20981.17240.94940.94550.9501
AQI 0.970.94970.83171.48661.68411.6941.86011.05230.96120.917
SGI 1.20211.24341.24931.7022.14282.67493.19872.39411.90131.4701
DEPI 0.99350.93770.96612.24651.64641.32011.13390.48120.66380.8464
SGAI 0.92110.87230.85570.79070.80170.78380.7670.84080.82560.8257
LVGI 1.16750.97611.0312.4352.44412.44462.14810.91960.90540.8803
TATA -0.1118-0.0231-0.0324-0.078-0.0905-0.1409-0.1277-0.0865-0.0864-0.0207
M-score -2.97-2.32-2.48-1.09-1.20-1.41-0.91-2.14-2.48-2.50
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