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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 Federal Realty Investment Trust was -1.67. The lowest was -3.23. And the median was -2.63.
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 Federal Realty Investment Trust 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 * 1.0226||+||0.528 * 1.014||+||0.404 * 0.4019||+||0.892 * 1.0702||+||0.115 * 1.0177|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9974||+||4.679 * -0.0364||-||0.327 * 1.5227|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $155.9 Mil.|
Revenue was 170.938 + 167.947 + 170.828 + 163.846 = $673.6 Mil.
Gross Profit was 139.03 + 136.542 + 114.998 + 131.906 = $522.5 Mil.
Total Current Assets was $179.9 Mil.
Total Assets was $4,479.4 Mil.
Property, Plant and Equipment(Net PPE) was $4,105.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $168.6 Mil.
Selling, General & Admin. Expense(SGA) was $33.3 Mil.
Total Current Liabilities was $234.1 Mil.
Long-Term Debt was $2,364.9 Mil.
Net Income was 47.075 + 43.545 + 38.753 + 28.456 = $157.8 Mil.
Non Operating Income was 0.446 + 0.25 + 0.213 + -9.472 = $-8.6 Mil.
Cash Flow from Operations was 69.777 + 92.907 + 79.162 + 87.77 = $329.6 Mil.
|Accounts Receivable was $142.5 Mil.
Revenue was 159.03 + 157.388 + 157.149 + 155.785 = $629.4 Mil.
Gross Profit was 129.985 + 129.179 + 110.076 + 125.778 = $495.0 Mil.
Total Current Assets was $0.0 Mil.
Total Assets was $4,159.5 Mil.
Property, Plant and Equipment(Net PPE) was $3,710.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $155.2 Mil.
Selling, General & Admin. Expense(SGA) was $31.2 Mil.
Total Current Liabilities was $0.0 Mil.
Long-Term Debt was $1,585.0 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)|
|=||(155.937 / 673.559)||/||(142.482 / 629.352)|
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)|
|=||(136.542 / 629.352)||/||(139.03 / 673.559)|
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 - (179.854 + 4105.326) / 4479.398)||/||(1 - (0 + 3710.724) / 4159.476)|
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))|
|=||(155.222 / (155.222 + 3710.724))||/||(168.617 / (168.617 + 4105.326))|
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)|
|=||(33.27 / 673.559)||/||(31.166 / 629.352)|
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)|
|=||((2364.936 + 234.139) / 4479.398)||/||((1585.013 + 0) / 4159.476)|
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|
|=||(157.829 - -8.563||-||329.616)||/||4479.398|
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.
Federal Realty Investment Trust has a M-score of -2.97 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
Federal Realty Investment Trust Annual Data
Federal Realty Investment Trust Quarterly Data