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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 -1.72. The lowest was -3.23. And the median was -2.62.
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 * 0.9529||+||0.528 * 1.0417||+||0.404 * 1.1561||+||0.892 * 1.0785||+||0.115 * 1.033|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9902||+||4.679 * -0.0311||-||0.327 * 0.9938|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $156.9 Mil.|
Revenue was 181.461 + 184.792 + 176.377 + 170.938 = $713.6 Mil.
Gross Profit was 128.171 + 122.959 + 141.403 + 139.03 = $531.6 Mil.
Total Current Assets was $179.1 Mil.
Total Assets was $4,733.8 Mil.
Property, Plant and Equipment(Net PPE) was $4,335.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $170.7 Mil.
Selling, General & Admin. Expense(SGA) was $34.6 Mil.
Total Current Liabilities was $213.8 Mil.
Long-Term Debt was $2,539.5 Mil.
Net Income was 43.632 + 46.186 + 35.162 + 47.075 = $172.1 Mil.
Non Operating Income was -18.666 + 0.22 + -10.211 + 0.446 = $-28.2 Mil.
Cash Flow from Operations was 91.662 + 81.986 + 104.284 + 69.777 = $347.7 Mil.
|Accounts Receivable was $152.7 Mil.
Revenue was 167.947 + 170.828 + 163.846 + 159.03 = $661.7 Mil.
Gross Profit was 136.542 + 114.998 + 131.906 + 129.985 = $513.4 Mil.
Total Current Assets was $194.0 Mil.
Total Assets was $4,431.5 Mil.
Property, Plant and Equipment(Net PPE) was $4,060.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $165.4 Mil.
Selling, General & Admin. Expense(SGA) was $32.4 Mil.
Total Current Liabilities was $235.7 Mil.
Long-Term Debt was $2,357.8 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)|
|=||(156.895 / 713.568)||/||(152.673 / 661.651)|
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)|
|=||(122.959 / 661.651)||/||(128.171 / 713.568)|
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 - (179.07 + 4335.782) / 4733.838)||/||(1 - (193.985 + 4060.187) / 4431.485)|
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))|
|=||(165.365 / (165.365 + 4060.187))||/||(170.726 / (170.726 + 4335.782))|
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)|
|=||(34.64 / 713.568)||/||(32.439 / 661.651)|
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)|
|=||((2539.505 + 213.837) / 4733.838)||/||((2357.751 + 235.748) / 4431.485)|
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|
|=||(172.055 - -28.211||-||347.709)||/||4733.838|
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 -2.51 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