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Five Star Quality Care Inc (NYSE:FVE)
Beneish M-Score
-2.89 (As of Today)

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.

Five Star Quality Care Inc has a M-score of -2.89 suggests that the company is not a manipulator.

FVE' s 10-Year Beneish M-Score Range
Min: -5.16   Max: 0.79
Current: -2.89

-5.16
0.79

During the past 13 years, the highest Beneish M-Score of Five Star Quality Care Inc was 0.79. The lowest was -5.16. And the median was -2.59.


Definition

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 Five Star Quality Care Inc 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 * 0.9158+0.528 * 1.0157+0.404 * 1.0875+0.892 * 1.0207+0.115 * 0.9101
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0106+4.679 * -0.0716-0.327 * 1.1448
=-2.89

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $36 Mil.
Revenue was 334.339 + 332.799 + 328.411 + 325.225 = $1,321 Mil.
Gross Profit was 208.632 + 207.487 + 201.389 + 204.034 = $822 Mil.
Total Current Assets was $143 Mil.
Total Assets was $604 Mil.
Property, Plant and Equipment(Net PPE) was $354 Mil.
Depreciation, Depletion and Amortization(DDA) was $32 Mil.
Selling, General & Admin. Expense(SGA) was $802 Mil.
Total Current Liabilities was $207 Mil.
Long-Term Debt was $50 Mil.
Net Income was -3.008 + -1.891 + -6.759 + -5.43 = $-17 Mil.
Non Operating Income was 0.023 + 0.013 + 0.313 + -0.192 = $0 Mil.
Cash Flow from Operations was -6.741 + 26.042 + 8.982 + -2.302 = $26 Mil.
Accounts Receivable was $38 Mil.
Revenue was 324.263 + 323.261 + 323.6 + 322.846 = $1,294 Mil.
Gross Profit was 204.115 + 205.356 + 205.204 + 202.827 = $818 Mil.
Total Current Assets was $149 Mil.
Total Assets was $573 Mil.
Property, Plant and Equipment(Net PPE) was $331 Mil.
Depreciation, Depletion and Amortization(DDA) was $27 Mil.
Selling, General & Admin. Expense(SGA) was $778 Mil.
Total Current Liabilities was $177 Mil.
Long-Term Debt was $37 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(35.732 / 1320.774) / (38.226 / 1293.97)
=0.02705383 / 0.02954164
=0.9158

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(207.487 / 1293.97) / (208.632 / 1320.774)
=0.63177817 / 0.62201558
=1.0157

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (143.24 + 354.081) / 603.888) / (1 - (148.678 + 331.108) / 572.725)
=0.17646815 / 0.16227509
=1.0875

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=1320.774 / 1293.97
=1.0207

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))
=(26.873 / (26.873 + 331.108)) / (31.833 / (31.833 + 354.081))
=0.07506823 / 0.08248729
=0.9101

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)
=(802.283 / 1320.774) / (777.763 / 1293.97)
=0.60743397 / 0.60106726
=1.0106

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)
=((50.246 + 207.349) / 603.888) / ((36.758 + 176.652) / 572.725)
=0.42656089 / 0.37262211
=1.1448

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(-17.088 - 0.157 - 25.981) / 603.888
=-0.0716

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.

Five Star Quality Care Inc has a M-score of -2.89 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Five Star Quality Care Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.02241.32280.72710.9940.87251.24730.59470.83490.8776
GMI 1.01773.2271.02090.9841.00170.28611.02621.09991.0709
AQI 0.92370.76610.94942.20260.37071.15891.54390.94921.0206
SGI 1.22781.11111.19291.12961.06620.8461.06961.13921.0737
DEPI 0.49950.86740.8441.30530.91951.26191.13540.80450.8863
SGAI 0.96930.50240.51341.06421.03933.69630.97750.90470.9417
LVGI 1.23151.25680.92451.03930.82680.79820.97150.88770.9848
TATA 0.26790.1706-0.0548-0.06740.1119-0.22150.044-0.0422-0.0633
M-score -1.15-0.22-2.73-2.20-2.23-4.11-2.32-2.64-2.78

Five Star Quality Care Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.94870.88280.86550.57610.59310.56740.87790.83350.83930.9158
GMI 0.85180.85510.88410.92241.14861.18241.07291.05581.03671.0157
AQI 1.80582.31820.94921.02820.89340.93161.02061.07511.04491.0875
SGI 1.05571.03651.09891.14531.18691.22771.07331.04921.03461.0207
DEPI 0.84990.65630.80450.7850.84640.87390.88630.88540.9340.9101
SGAI 1.19361.18321.13971.08830.86840.8490.94160.96950.98921.0106
LVGI 0.98690.75590.88770.85290.83930.95150.98481.02371.14771.1448
TATA 0.03770.0938-0.0422-0.0332-0.0196-0.0869-0.0647-0.0954-0.1207-0.0716
M-score -2.10-1.65-2.80-2.92-2.69-2.99-2.78-2.99-3.18-2.89
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