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Five Star Quality Care Inc (NYSE:FVE)
Beneish M-Score
-4.06 (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 -4.06 suggests that the company is not a manipulator.

FVE' s Beneish M-Score Range Over the Past 10 Years
Min: -5.16   Max: 0.79
Current: -4.06

-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 -2.69.


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 * 1.0374+0.528 * 1.0245+0.404 * 0.3694+0.892 * 1.0247+0.115 * 0.9375
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9773+4.679 * -0.2779-0.327 * 1.2663
=-4.06

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $38 Mil.
Revenue was 344.572 + 342.269 + 333.973 + 332.526 = $1,353 Mil.
Gross Profit was 209.765 + 73.038 + 205.471 + 199.028 = $687 Mil.
Total Current Assets was $120 Mil.
Total Assets was $507 Mil.
Property, Plant and Equipment(Net PPE) was $355 Mil.
Depreciation, Depletion and Amortization(DDA) was $34 Mil.
Selling, General & Admin. Expense(SGA) was $669 Mil.
Total Current Liabilities was $231 Mil.
Long-Term Debt was $43 Mil.
Net Income was -27.488 + -3.91 + -5.302 + -73.748 = $-110 Mil.
Non Operating Income was 0 + 0.71 + 0.02 + 0.043 = $1 Mil.
Cash Flow from Operations was 11.746 + 7.97 + 15.988 + -5.946 = $30 Mil.
Accounts Receivable was $36 Mil.
Revenue was 334.339 + 332.799 + 328.411 + 325.225 = $1,321 Mil.
Gross Profit was 208.632 + 73.308 + 201.389 + 203.853 = $687 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 $668 Mil.
Total Current Liabilities was $207 Mil.
Long-Term Debt was $50 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)
=(37.983 / 1353.34) / (35.732 / 1320.774)
=0.02806612 / 0.02705383
=1.0374

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)
=(73.038 / 1320.774) / (209.765 / 1353.34)
=0.52028735 / 0.50785612
=1.0245

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 - (119.687 + 354.514) / 507.272) / (1 - (143.24 + 354.081) / 603.888)
=0.06519382 / 0.17646815
=0.3694

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
=1353.34 / 1320.774
=1.0247

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))
=(31.833 / (31.833 + 354.081)) / (34.203 / (34.203 + 354.514))
=0.08248729 / 0.08798946
=0.9375

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)
=(669.03 / 1353.34) / (668.104 / 1320.774)
=0.49435471 / 0.50584279
=0.9773

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)
=((42.924 + 231.071) / 507.272) / ((50.246 + 207.349) / 603.888)
=0.54013429 / 0.42656089
=1.2663

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
=(-110.448 - 0.773 - 29.758) / 507.272
=-0.2779

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 -4.06 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.02241.32280.72710.9940.87251.24730.59470.83490.87761.026
GMI 1.01773.2271.02090.9841.00170.28611.02621.09991.07111.0289
AQI 0.92370.76610.94942.20260.37071.15891.54390.94921.02060.624
SGI 1.22781.11111.19291.12961.06620.8461.06961.13921.07371.0241
DEPI 0.49950.86740.8441.30530.91951.26191.13540.80450.88630.8906
SGAI 0.96930.50240.51341.06421.03933.69630.97750.90470.94171.0017
LVGI 1.23151.25680.92451.03930.82680.79820.97150.88770.98481.243
TATA 0.26790.1706-0.0548-0.06740.1119-0.22150.044-0.0422-0.0636-0.2021
M-score -1.15-0.22-2.73-2.20-2.23-4.11-2.32-2.64-2.78-3.61

Five Star Quality Care Inc Quarterly Data

Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15
DSRI 0.59310.56740.87790.83350.83930.91581.02561.01960.97361.0374
GMI 1.14861.18241.07311.0561.24081.21431.22891.21651.01951.0245
AQI 0.89340.93161.02061.07511.04491.08750.6240.58920.59660.3694
SGI 1.18691.22771.07331.04921.03461.02071.02451.0251.02471.0247
DEPI 0.84640.87390.88630.88540.9340.91010.89060.89880.89490.9375
SGAI 0.86840.8490.94160.96950.82210.84160.83450.82680.99080.9773
LVGI 0.83930.95150.98481.02371.14771.14481.2431.28071.21151.2663
TATA -0.0196-0.0869-0.065-0.0957-0.121-0.0719-0.2021-0.2137-0.1831-0.2779
M-score -2.69-2.99-2.78-2.99-3.04-2.76-3.47-3.56-3.57-4.06
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