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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 -1.35. The lowest was -3.36. And the median was -2.55.
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 * 0.9005||+||0.528 * 1.1239||+||0.404 * 0.8269||+||0.892 * 1.0853||+||0.115 * 1.0083|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8634||+||4.679 * -0.023||-||0.327 * 0.9859|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $150.0 Mil.|
Revenue was 201.157 + 197.981 + 198.344 + 192.507 = $790.0 Mil.
Gross Profit was 162.569 + 161.003 + 155.525 + 67.591 = $546.7 Mil.
Total Current Assets was $251.3 Mil.
Total Assets was $5,397.3 Mil.
Property, Plant and Equipment(Net PPE) was $4,915.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $191.6 Mil.
Selling, General & Admin. Expense(SGA) was $33.4 Mil.
Total Current Liabilities was $271.5 Mil.
Long-Term Debt was $2,809.6 Mil.
Net Income was 58.977 + 55.941 + 76.955 + 67.954 = $259.8 Mil.
Non Operating Income was -0.929 + -1.558 + -0.683 + -0.431 = $-3.6 Mil.
Cash Flow from Operations was 89.736 + 98.728 + 100.508 + 98.685 = $387.7 Mil.
|Accounts Receivable was $153.5 Mil.
Revenue was 185.252 + 181.461 + 184.792 + 176.377 = $727.9 Mil.
Gross Profit was 150.813 + 148.838 + 143.353 + 123.135 = $566.1 Mil.
Total Current Assets was $166.4 Mil.
Total Assets was $4,783.8 Mil.
Property, Plant and Equipment(Net PPE) was $4,370.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $171.8 Mil.
Selling, General & Admin. Expense(SGA) was $35.6 Mil.
Total Current Liabilities was $236.9 Mil.
Long-Term Debt was $2,532.8 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)|
|=||(150.039 / 789.989)||/||(153.517 / 727.882)|
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)|
|=||(566.139 / 727.882)||/||(546.688 / 789.989)|
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 - (251.32 + 4915.822) / 5397.337)||/||(1 - (166.381 + 4370.67) / 4783.803)|
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))|
|=||(171.784 / (171.784 + 4370.67))||/||(191.56 / (191.56 + 4915.822))|
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)|
|=||(33.397 / 789.989)||/||(35.64 / 727.882)|
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)|
|=||((2809.564 + 271.466) / 5397.337)||/||((2532.825 + 236.931) / 4783.803)|
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|
|=||(259.827 - -3.601||-||387.657)||/||5397.337|
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 -2.58 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