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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.
Forest City Enterprises Inc has a M-score of signals that the company is a manipulator.
During the past 13 years, the highest Beneish M-Score of Forest City Enterprises Inc was 0.00. The lowest was 0.00. And the median was 0.00.
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 Forest City Enterprises 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 *||+||0.528 *||+||0.404 *||+||0.892 *||+||0.115 *|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 *||+||4.679 *||-||0.327 *|
|This Year (Jun14) TTM:||Last Year (Apr13) TTM:|
|Accounts Receivable was $508 Mil.|
Revenue was 229.637 + 251.187 + 266.227 + 291.762 = $1,039 Mil.
Gross Profit was 93.889 + 80.084 + 55.972 + 100.358 = $330 Mil.
Total Current Assets was $1,204 Mil.
Total Assets was $8,552 Mil.
Property, Plant and Equipment(Net PPE) was $6,320 Mil.
Depreciation, Depletion and Amortization(DDA) was $290 Mil.
Selling, General & Admin. Expense(SGA) was $10 Mil.
Total Current Liabilities was $1,275 Mil.
Long-Term Debt was $5,044 Mil.
Net Income was -92.992 + 15.52 + 153.329 + -16.281 = $60 Mil.
Non Operating Income was -22.072 + -2.756 + 475.818 + 26.932 = $478 Mil.
Cash Flow from Operations was 75.279 + 19.921 + 9.93 + 43.709 = $149 Mil.
|Accounts Receivable was $455 Mil.
Revenue was 305.615 + 269.966 + 279.303 + 272.849 = $1,128 Mil.
Gross Profit was 97.811 + 85.699 + 104.71 + 97.574 = $386 Mil.
Total Current Assets was $1,128 Mil.
Total Assets was $10,583 Mil.
Property, Plant and Equipment(Net PPE) was $8,419 Mil.
Depreciation, Depletion and Amortization(DDA) was $249 Mil.
Selling, General & Admin. Expense(SGA) was $0 Mil.
Total Current Liabilities was $1,853 Mil.
Long-Term Debt was $6,619 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(507.57 / 1038.813)||/||(454.527 / 1127.733)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(80.084 / 1127.733)||/||(93.889 / 1038.813)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (1203.836 + 6320.312) / 8551.521)||/||(1 - (1128.007 + 8419.283) / 10583.186)|
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.
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))|
|=||(248.857 / (248.857 + 8419.283))||/||(290.019 / (290.019 + 6320.312))|
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)|
|=||(10.059 / 1038.813)||/||(0 / 1127.733)|
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)|
|=||((5044.103 + 1274.992) / 8551.521)||/||((6618.603 + 1853.355) / 10583.186)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(59.576 - 477.922||-||148.839)||/||8551.521|
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.
Forest City Enterprises Inc has a M-score of signals that the company is likely to be a manipulator.
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
Forest City Enterprises Inc Annual Data
Forest City Enterprises Inc Quarterly Data