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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 (Sep14) TTM:||Last Year (Jul13) TTM:|
|Accounts Receivable was $443 Mil.|
Revenue was 234.743 + 229.637 + 251.187 + 266.227 = $982 Mil.
Gross Profit was 98.352 + 93.889 + 80.084 + 55.972 = $328 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 $24 Mil.
Total Current Liabilities was $1,250 Mil.
Long-Term Debt was $4,716 Mil.
Net Income was 0.686 + -92.992 + 15.52 + 153.329 = $77 Mil.
Non Operating Income was -2.269 + -22.072 + -2.756 + 475.818 = $449 Mil.
Cash Flow from Operations was 66.029 + 75.279 + 19.921 + 9.93 = $171 Mil.
|Accounts Receivable was $443 Mil.
Revenue was 291.762 + 305.615 + 269.966 + 291.62 = $1,159 Mil.
Gross Profit was 100.358 + 97.811 + 85.699 + 82.606 = $366 Mil.
Total Current Assets was $1,247 Mil.
Total Assets was $10,728 Mil.
Property, Plant and Equipment(Net PPE) was $8,431 Mil.
Depreciation, Depletion and Amortization(DDA) was $300 Mil.
Selling, General & Admin. Expense(SGA) was $0 Mil.
Total Current Liabilities was $1,724 Mil.
Long-Term Debt was $6,815 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)|
|=||(442.624 / 981.794)||/||(442.947 / 1158.963)|
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)|
|=||(93.889 / 1158.963)||/||(98.352 / 981.794)|
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 - (865.671 + 6342.024) / 8208.93)||/||(1 - (1246.858 + 8431.328) / 10728.101)|
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))|
|=||(300.471 / (300.471 + 8431.328))||/||(252.924 / (252.924 + 6342.024))|
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)|
|=||(23.822 / 981.794)||/||(0 / 1158.963)|
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)|
|=||((4716.396 + 1250.018) / 8208.93)||/||((6815.21 + 1723.849) / 10728.101)|
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|
|=||(76.543 - 448.721||-||171.159)||/||8208.93|
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