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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 -2.99. And the median was -2.56.
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 * 0.8954||+||0.528 * 1.0039||+||0.404 * 0.8653||+||0.892 * 1.0774||+||0.115 * 1.011|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8697||+||4.679 * -0.0305||-||0.327 * 0.9764|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $146.7 Mil.|
Revenue was 204.109 + 201.157 + 197.981 + 198.344 = $801.6 Mil.
Gross Profit was 68.882 + 162.569 + 161.003 + 155.525 = $548.0 Mil.
Total Current Assets was $170.0 Mil.
Total Assets was $5,423.3 Mil.
Property, Plant and Equipment(Net PPE) was $5,029.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $193.6 Mil.
Selling, General & Admin. Expense(SGA) was $33.4 Mil.
Total Current Liabilities was $289.5 Mil.
Long-Term Debt was $2,798.5 Mil.
Net Income was 58.037 + 58.977 + 55.941 + 76.955 = $249.9 Mil.
Non Operating Income was -0.773 + -0.929 + -1.558 + -0.683 = $-3.9 Mil.
Cash Flow from Operations was 130.282 + 89.736 + 98.728 + 100.508 = $419.3 Mil.
|Accounts Receivable was $152.0 Mil.
Revenue was 192.507 + 185.252 + 181.461 + 184.792 = $744.0 Mil.
Gross Profit was 67.591 + 150.813 + 148.838 + 143.353 = $510.6 Mil.
Total Current Assets was $173.1 Mil.
Total Assets was $4,896.6 Mil.
Property, Plant and Equipment(Net PPE) was $4,490.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $174.8 Mil.
Selling, General & Admin. Expense(SGA) was $35.6 Mil.
Total Current Liabilities was $228.3 Mil.
Long-Term Debt was $2,627.2 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)|
|=||(146.653 / 801.591)||/||(152.02 / 744.012)|
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)|
|=||(510.595 / 744.012)||/||(547.979 / 801.591)|
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 - (170.021 + 5029.839) / 5423.279)||/||(1 - (173.066 + 4490.365) / 4896.559)|
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))|
|=||(174.796 / (174.796 + 4490.365))||/||(193.585 / (193.585 + 5029.839))|
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)|
|=||(33.399 / 801.591)||/||(35.645 / 744.012)|
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)|
|=||((2798.452 + 289.481) / 5423.279)||/||((2627.216 + 228.309) / 4896.559)|
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|
|=||(249.91 - -3.943||-||419.254)||/||5423.279|
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 -2.67 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