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ARRIS International PLC (NAS:ARRS)
Beneish M-Score
-2.02 (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 -2.02 signals that the company is a manipulator.

ARRS' s Beneish M-Score Range Over the Past 10 Years
Min: -4.27   Max: -0.89
Current: -2.02

-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 * 1.3706+0.528 * 1.0997+0.404 * 1.2078+0.892 * 1.2443+0.115 * 0.8729
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8864+4.679 * -0.0578-0.327 * 0.9164
=-2.02

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $1,105 Mil.
Revenue was 1725.145 + 1730.044 + 1614.706 + 1101.682 = $6,172 Mil.
Gross Profit was 442.85 + 444.734 + 384.032 + 358.673 = $1,630 Mil.
Total Current Assets was $3,050 Mil.
Total Assets was $7,652 Mil.
Property, Plant and Equipment(Net PPE) was $352 Mil.
Depreciation, Depletion and Amortization(DDA) was $446 Mil.
Selling, General & Admin. Expense(SGA) was $446 Mil.
Total Current Liabilities was $1,753 Mil.
Long-Term Debt was $2,201 Mil.
Net Income was 48.162 + 84.228 + -202.573 + 30.041 = $-40 Mil.
Non Operating Income was -17.51 + -1.807 + -13.85 + -19.404 = $-53 Mil.
Cash Flow from Operations was 288.967 + 260.764 + -222.535 + 127.385 = $455 Mil.
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.



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)
=(1104.596 / 6171.577) / (647.726 / 4960.038)
=0.17898116 / 0.13058892
=1.3706

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)
=(1440.825 / 4960.038) / (1630.289 / 6171.577)
=0.29048669 / 0.26416085
=1.0997

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 - (3049.712 + 352.38) / 7651.816) / (1 - (2118.442 + 319.443) / 4513.24)
=0.55538764 / 0.45983706
=1.2078

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
=6171.577 / 4960.038
=1.2443

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))
=(303.918 / (303.918 + 319.443)) / (445.784 / (445.784 + 352.38))
=0.48754734 / 0.55851178
=0.8729

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)
=(446.458 / 6171.577) / (404.795 / 4960.038)
=0.07234099 / 0.08161127
=0.8864

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)
=((2200.642 + 1753.128) / 7651.816) / ((1525.454 + 1019.331) / 4513.24)
=0.51671002 / 0.56384881
=0.9164

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
=(-40.142 - -52.571 - 454.581) / 7651.816
=-0.0578

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 -2.02 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 local exchange's 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

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 0.46550.58940.65720.9571.01870.9761.20811.21241.2171.3706
GMI 0.94910.94510.95010.94860.99861.02671.00541.0491.08081.0997
AQI 1.05230.96120.91440.91160.95160.94930.97661.30581.21321.2078
SGI 2.39411.90131.47011.18271.04530.94320.90140.97831.10181.2443
DEPI 0.4740.66940.84640.93480.96430.95560.93931.00230.92310.8729
SGAI 0.84010.82440.82570.87640.92231.00851.12691.08410.97150.8864
LVGI 0.91960.90540.87650.910.91030.93030.98170.89260.9180.9164
TATA -0.0826-0.0823-0.0208-0.00360.0212-0.0123-0.0478-0.0374-0.0516-0.0578
M-score -2.13-2.46-2.48-2.39-2.30-2.60-2.63-2.31-2.28-2.02
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