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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 -2.61.
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 * 0.9542||+||0.528 * 1.0078||+||0.404 * 1.4756||+||0.892 * 1.0752||+||0.115 * 1.0132|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9542||+||4.679 * -0.0351||-||0.327 * 1.008|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $151.9 Mil.|
Revenue was 184.792 + 176.377 + 170.938 + 167.947 = $700.1 Mil.
Gross Profit was 122.959 + 141.403 + 139.03 + 136.542 = $539.9 Mil.
Total Current Assets was $323.3 Mil.
Total Assets was $4,780.8 Mil.
Property, Plant and Equipment(Net PPE) was $4,174.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $168.9 Mil.
Selling, General & Admin. Expense(SGA) was $33.5 Mil.
Total Current Liabilities was $224.4 Mil.
Long-Term Debt was $2,636.7 Mil.
Net Income was 46.186 + 35.162 + 47.075 + 43.545 = $172.0 Mil.
Non Operating Income was 0.22 + -10.211 + 0.446 + 0.25 = $-9.3 Mil.
Cash Flow from Operations was 81.986 + 104.284 + 69.777 + 92.907 = $349.0 Mil.
|Accounts Receivable was $148.1 Mil.
Revenue was 170.828 + 163.846 + 159.03 + 157.388 = $651.1 Mil.
Gross Profit was 114.998 + 131.906 + 129.985 + 129.179 = $506.1 Mil.
Total Current Assets was $223.8 Mil.
Total Assets was $4,405.6 Mil.
Property, Plant and Equipment(Net PPE) was $4,005.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $164.3 Mil.
Selling, General & Admin. Expense(SGA) was $32.6 Mil.
Total Current Liabilities was $223.8 Mil.
Long-Term Debt was $2,391.9 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)|
|=||(151.892 / 700.054)||/||(148.056 / 651.092)|
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)|
|=||(141.403 / 651.092)||/||(122.959 / 700.054)|
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 - (323.329 + 4174.397) / 4780.75)||/||(1 - (223.755 + 4005.133) / 4405.647)|
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))|
|=||(164.325 / (164.325 + 4005.133))||/||(168.948 / (168.948 + 4174.397))|
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)|
|=||(33.465 / 700.054)||/||(32.617 / 651.092)|
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)|
|=||((2636.733 + 224.448) / 4780.75)||/||((2391.937 + 223.789) / 4405.647)|
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|
|=||(171.968 - -9.295||-||348.954)||/||4780.75|
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 -2.42 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