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ARRIS International PLC (NAS:ARRS)
Beneish M-Score
-2.61 (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 -2.61 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: -2.61

-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 -2.49.


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 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 * 0.976+0.528 * 1.0267+0.404 * 0.9493+0.892 * 0.9432+0.115 * 0.9556
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0085+4.679 * -0.0141-0.327 * 0.9303
=-2.61

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $648 Mil.
Revenue was 1221.416 + 1260.077 + 1215.158 + 1263.387 = $4,960 Mil.
Gross Profit was 359.333 + 364.361 + 336.556 + 380.575 = $1,441 Mil.
Total Current Assets was $2,118 Mil.
Total Assets was $4,513 Mil.
Property, Plant and Equipment(Net PPE) was $319 Mil.
Depreciation, Depletion and Amortization(DDA) was $304 Mil.
Selling, General & Admin. Expense(SGA) was $405 Mil.
Total Current Liabilities was $1,019 Mil.
Long-Term Debt was $1,525 Mil.
Net Income was 26.257 + 16.758 + 19.126 + 192.76 = $255 Mil.
Non Operating Income was -11.462 + 4.315 + -8.792 + -20.225 = $-36 Mil.
Cash Flow from Operations was 215.905 + 71.856 + -63.263 + 130.045 = $355 Mil.
Accounts Receivable was $704 Mil.
Revenue was 1405.445 + 1429.071 + 1225.017 + 1199.067 = $5,259 Mil.
Gross Profit was 435.734 + 419.412 + 346.774 + 366.371 = $1,568 Mil.
Total Current Assets was $1,848 Mil.
Total Assets was $4,305 Mil.
Property, Plant and Equipment(Net PPE) was $371 Mil.
Depreciation, Depletion and Amortization(DDA) was $324 Mil.
Selling, General & Admin. Expense(SGA) was $426 Mil.
Total Current Liabilities was $1,122 Mil.
Long-Term Debt was $1,488 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)
=(647.726 / 4960.038) / (703.566 / 5258.6)
=0.13058892 / 0.13379341
=0.976

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)
=(364.361 / 5258.6) / (359.333 / 4960.038)
=0.29823356 / 0.29048669
=1.0267

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 - (2118.442 + 319.443) / 4513.24) / (1 - (1848.388 + 371.496) / 4305.244)
=0.45983706 / 0.48437673
=0.9493

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
=4960.038 / 5258.6
=0.9432

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))
=(324.063 / (324.063 + 371.496)) / (303.918 / (303.918 + 319.443))
=0.46590296 / 0.48754734
=0.9556

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)
=(404.795 / 4960.038) / (425.552 / 5258.6)
=0.08161127 / 0.08092496
=1.0085

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)
=((1525.454 + 1019.331) / 4513.24) / ((1487.585 + 1121.934) / 4305.244)
=0.56384881 / 0.60612569
=0.9303

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
=(254.901 - -36.164 - 354.543) / 4513.24
=-0.0141

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 -2.61 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

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 International PLC Quarterly Data

Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15
DSRI 2.1691.7121.22831.09810.46550.58940.65720.9571.01870.976
GMI 1.28581.22581.20981.17240.94910.94510.95010.94860.99861.0267
AQI 1.48661.68411.6941.86011.05230.96120.9170.91160.95160.9493
SGI 1.7022.14282.67493.19872.39411.90131.47011.18271.04530.9432
DEPI 2.27391.63681.32011.13390.4740.66940.84640.93480.96430.9556
SGAI 0.78870.80.78380.7670.84010.82440.82570.87640.92231.0085
LVGI 2.4352.44412.44462.14810.91960.90540.88030.910.91030.9303
TATA -0.0777-0.0903-0.1384-0.1234-0.0826-0.0823-0.0207-0.00360.0212-0.0141
M-score -1.08-1.20-1.43-0.89-2.13-2.46-2.48-2.39-2.30-2.61
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