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ARRIS International PLC (NAS:ARRS)
Beneish M-Score
-2.28 (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 -2.28 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: -2.28

-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 -2.50.


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 * 1.217+0.528 * 1.0808+0.404 * 1.2132+0.892 * 1.1018+0.115 * 0.9231
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9715+4.679 * -0.0516-0.327 * 0.918
=-2.28

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $1,054 Mil.
Revenue was 1730.044 + 1614.706 + 1101.682 + 1221.416 = $5,668 Mil.
Gross Profit was 444.734 + 384.032 + 358.673 + 359.333 = $1,547 Mil.
Total Current Assets was $2,855 Mil.
Total Assets was $7,540 Mil.
Property, Plant and Equipment(Net PPE) was $368 Mil.
Depreciation, Depletion and Amortization(DDA) was $408 Mil.
Selling, General & Admin. Expense(SGA) was $435 Mil.
Total Current Liabilities was $1,688 Mil.
Long-Term Debt was $2,221 Mil.
Net Income was 84.228 + -202.573 + 30.041 + 26.257 = $-62 Mil.
Non Operating Income was -1.807 + -13.85 + -19.404 + -11.462 = $-47 Mil.
Cash Flow from Operations was 260.764 + -222.535 + 119.374 + 215.905 = $374 Mil.
Accounts Receivable was $786 Mil.
Revenue was 1260.077 + 1215.158 + 1263.387 + 1405.445 = $5,144 Mil.
Gross Profit was 364.361 + 336.556 + 380.575 + 435.734 = $1,517 Mil.
Total Current Assets was $2,083 Mil.
Total Assets was $4,559 Mil.
Property, Plant and Equipment(Net PPE) was $324 Mil.
Depreciation, Depletion and Amortization(DDA) was $306 Mil.
Selling, General & Admin. Expense(SGA) was $407 Mil.
Total Current Liabilities was $1,037 Mil.
Long-Term Debt was $1,538 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)
=(1053.76 / 5667.848) / (785.869 / 5144.067)
=0.18591889 / 0.15277192
=1.217

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)
=(1517.226 / 5144.067) / (1546.772 / 5667.848)
=0.29494678 / 0.27290287
=1.0808

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 - (2855.19 + 367.696) / 7539.853) / (1 - (2083.161 + 324.154) / 4558.675)
=0.5725532 / 0.4719266
=1.2132

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
=5667.848 / 5144.067
=1.1018

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))
=(305.966 / (305.966 + 324.154)) / (408.082 / (408.082 + 367.696))
=0.48556783 / 0.52602935
=0.9231

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)
=(435.26 / 5667.848) / (406.607 / 5144.067)
=0.07679458 / 0.07904388
=0.9715

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)
=((2221.383 + 1687.794) / 7539.853) / ((1537.641 + 1036.937) / 4558.675)
=0.5184686 / 0.56476454
=0.918

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
=(-62.047 - -46.523 - 373.508) / 7539.853
=-0.0516

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 -2.28 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

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 1.09810.46550.58940.65720.9571.01870.9761.20811.21241.217
GMI 1.17240.94910.94510.95010.94860.99861.02671.00541.0491.0808
AQI 1.86011.05230.96120.91440.91160.95160.94930.97661.30581.2132
SGI 3.19872.39411.90131.47011.18271.04530.94320.90140.97831.1018
DEPI 1.13390.4740.66940.84640.93480.96430.95560.93931.00230.9231
SGAI 0.7670.84010.82440.82570.87640.92231.00851.12691.08410.9715
LVGI 2.14810.91960.90540.87650.910.91030.93030.98170.89260.918
TATA -0.1234-0.0826-0.0823-0.0208-0.00360.0212-0.0141-0.0478-0.0374-0.0516
M-score -0.89-2.13-2.46-2.48-2.39-2.30-2.61-2.63-2.31-2.28
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