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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.
During the past 13 years, the highest Beneish M-Score of Forest City Realty Trust Inc was -3.04. The lowest was -3.20. And the median was -3.12.
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 Realty Trust 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 * 0.9475||+||0.528 * 0.8009||+||0.404 * 0.9479||+||0.892 * 1.0591||+||0.115 * 1.1558|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.3777||+||4.679 * -0.0924||-||0.327 * 0.8804|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $444 Mil.|
Revenue was 289.057 + 259.759 + 237.082 + 252.135 = $1,038 Mil.
Gross Profit was 135.554 + 114.891 + 96.154 + 100.639 = $447 Mil.
Total Current Assets was $1,017 Mil.
Total Assets was $9,960 Mil.
Property, Plant and Equipment(Net PPE) was $7,792 Mil.
Depreciation, Depletion and Amortization(DDA) was $267 Mil.
Selling, General & Admin. Expense(SGA) was $52 Mil.
Total Current Liabilities was $1,600 Mil.
Long-Term Debt was $4,773 Mil.
Net Income was -302.219 + 303.756 + -54.209 + 69.191 = $17 Mil.
Non Operating Income was -23.656 + 482.632 + -37.255 + 255.284 = $677 Mil.
Cash Flow from Operations was 70.157 + 75.401 + 12.992 + 100.793 = $259 Mil.
|Accounts Receivable was $443 Mil.
Revenue was 234.743 + 229.637 + 249.537 + 266.227 = $980 Mil.
Gross Profit was 98.352 + 93.889 + 89.995 + 55.972 = $338 Mil.
Total Current Assets was $866 Mil.
Total Assets was $8,209 Mil.
Property, Plant and Equipment(Net PPE) was $6,342 Mil.
Depreciation, Depletion and Amortization(DDA) was $253 Mil.
Selling, General & Admin. Expense(SGA) was $35 Mil.
Total Current Liabilities was $1,250 Mil.
Long-Term Debt was $4,716 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)|
|=||(444.136 / 1038.033)||/||(442.624 / 980.144)|
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)|
|=||(338.208 / 980.144)||/||(447.238 / 1038.033)|
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 - (1017.147 + 7791.501) / 9960.241)||/||(1 - (865.671 + 6342.024) / 8208.93)|
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))|
|=||(252.924 / (252.924 + 6342.024))||/||(267.41 / (267.41 + 7791.501))|
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)|
|=||(51.628 / 1038.033)||/||(35.383 / 980.144)|
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)|
|=||((4773.418 + 1600.335) / 9960.241)||/||((4716.396 + 1250.018) / 8208.93)|
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|
|=||(16.519 - 677.005||-||259.343)||/||9960.241|
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 Realty Trust Inc has a M-score of -3.04 suggests that the company will not 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 Realty Trust Inc Annual Data
Forest City Realty Trust Inc Quarterly Data