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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 -2.51. The lowest was -3.19. And the median was -2.85.
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 * 0.4325||+||0.528 * 0.9351||+||0.404 * 0.8733||+||0.892 * 1.1448||+||0.115 * 0.6717|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1067||+||4.679 * 0.0245||-||0.327 * 0.8745|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $219.9 Mil.|
Revenue was 237.53 + 225.963 + 226.263 + 272.83 = $962.6 Mil.
Gross Profit was 121.46 + 116.979 + 103.708 + 125.377 = $467.5 Mil.
Total Current Assets was $1,163.1 Mil.
Total Assets was $8,550.8 Mil.
Property, Plant and Equipment(Net PPE) was $6,524.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $261.1 Mil.
Selling, General & Admin. Expense(SGA) was $59.1 Mil.
Total Current Liabilities was $929.2 Mil.
Long-Term Debt was $3,855.9 Mil.
Net Income was -430.861 + 26.599 + 244.035 + 548.714 = $388.5 Mil.
Non Operating Income was -301.281 + 19.748 + 195.009 + -41.835 = $-128.4 Mil.
Cash Flow from Operations was 96.861 + 102.223 + -9.05 + 116.926 = $307.0 Mil.
|Accounts Receivable was $444.1 Mil.
Revenue was 264.42 + 232.719 + 208.262 + 135.44 = $840.8 Mil.
Gross Profit was 128.846 + 105.713 + 87.292 + 60.04 = $381.9 Mil.
Total Current Assets was $1,017.1 Mil.
Total Assets was $9,960.2 Mil.
Property, Plant and Equipment(Net PPE) was $7,791.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $206.7 Mil.
Selling, General & Admin. Expense(SGA) was $46.7 Mil.
Total Current Liabilities was $1,600.3 Mil.
Long-Term Debt was $4,773.4 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)|
|=||(219.903 / 962.586)||/||(444.136 / 840.841)|
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)|
|=||(381.891 / 840.841)||/||(467.524 / 962.586)|
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 - (1163.112 + 6524.295) / 8550.807)||/||(1 - (1017.147 + 7791.501) / 9960.241)|
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))|
|=||(206.708 / (206.708 + 7791.501))||/||(261.067 / (261.067 + 6524.295))|
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)|
|=||(59.118 / 962.586)||/||(46.661 / 840.841)|
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)|
|=||((3855.895 + 929.207) / 8550.807)||/||((4773.418 + 1600.335) / 9960.241)|
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|
|=||(388.487 - -128.359||-||306.96)||/||8550.807|
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 -2.86 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