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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 -2.59.
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 * 0.9716||+||0.528 * 1.0071||+||0.404 * 1.0806||+||0.892 * 1.0844||+||0.115 * 1.0571|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0171||+||4.679 * -0.0269||-||0.327 * 1.0104|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|Accounts Receivable was $152.0 Mil.|
Revenue was 192.507 + 185.252 + 181.461 + 184.792 = $744.0 Mil.
Gross Profit was 130.456 + 129.009 + 128.171 + 122.959 = $510.6 Mil.
Total Current Assets was $173.1 Mil.
Total Assets was $4,911.7 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 $2,642.4 Mil.
Net Income was 67.954 + 52.447 + 43.632 + 46.186 = $210.2 Mil.
Non Operating Income was 0.43 + 0.36 + -18.666 + 0.22 = $-17.7 Mil.
Cash Flow from Operations was 98.685 + 87.502 + 91.662 + 81.986 = $359.8 Mil.
|Accounts Receivable was $144.3 Mil.
Revenue was 176.377 + 170.938 + 167.947 + 170.828 = $686.1 Mil.
Gross Profit was 123.135 + 118.656 + 117.378 + 114.998 = $474.2 Mil.
Total Current Assets was $192.2 Mil.
Total Assets was $4,546.9 Mil.
Property, Plant and Equipment(Net PPE) was $4,141.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $170.8 Mil.
Selling, General & Admin. Expense(SGA) was $32.3 Mil.
Total Current Liabilities was $220.4 Mil.
Long-Term Debt was $2,409.7 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)|
|=||(152.02 / 744.012)||/||(144.279 / 686.09)|
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)|
|=||(129.009 / 686.09)||/||(130.456 / 744.012)|
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 - (173.066 + 4490.365) / 4911.709)||/||(1 - (192.23 + 4141.948) / 4546.87)|
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))|
|=||(170.814 / (170.814 + 4141.948))||/||(174.796 / (174.796 + 4490.365))|
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)|
|=||(35.645 / 744.012)||/||(32.316 / 686.09)|
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)|
|=||((2642.366 + 228.309) / 4911.709)||/||((2409.677 + 220.42) / 4546.87)|
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|
|=||(210.219 - -17.656||-||359.835)||/||4911.709|
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 -2.52 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