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Five Star Quality Care, Inc. (NYSE:FVE)
Beneish M-Score
-2.88 (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 -2.88 suggests that the company is not a manipulator.

FVE' s 10-Year Beneish M-Score Range
Min: -5.16   Max: 0.79
Current: -2.88

-5.16
0.79

During the past 12 years, the highest Beneish M-Score of Five Star Quality Care, Inc. was 0.79. The lowest was -5.16. And the median was -2.41.


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 * 0.67+0.528 * 1.1791+0.404 * 0.9316+0.892 * 1.2269+0.115 * 0.9018
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.849+4.679 * -0.0841-0.327 * 0.9515
=-2.88

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

This Year (Sep13) TTM:Last Year (Sep12) TTM:
Accounts Receivable was $45 Mil.
Revenue was 324.112 + 323.261 + 323.6 + 322.185 = $1,293 Mil.
Gross Profit was 203.902 + 205.356 + 205.204 + 204.827 = $819 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 $26 Mil.
Selling, General & Admin. Expense(SGA) was $777 Mil.
Total Current Liabilities was $177 Mil.
Long-Term Debt was $37 Mil.
Net Income was -0.198 + 0.798 + 2.14 + 1.946 = $5 Mil.
Non Operating Income was -0.641 + -0.158 + 0.087 + -0.089 = $-1 Mil.
Cash Flow from Operations was 26.238 + 10.212 + 1.91 + 15.318 = $54 Mil.
Accounts Receivable was $55 Mil.
Revenue was 297.169 + 296.493 + 291.298 + 169.035 = $1,054 Mil.
Gross Profit was 205.343 + 206.598 + 203.633 + 171.8 = $787 Mil.
Total Current Assets was $128 Mil.
Total Assets was $564 Mil.
Property, Plant and Equipment(Net PPE) was $337 Mil.
Depreciation, Depletion and Amortization(DDA) was $24 Mil.
Selling, General & Admin. Expense(SGA) was $746 Mil.
Total Current Liabilities was $158 Mil.
Long-Term Debt was $63 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)
=(45.11 / 1293.158) / (54.88 / 1053.995)
=0.0348836 / 0.05206856
=0.67

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)
=(205.356 / 1053.995) / (203.902 / 1293.158)
=0.7470377 / 0.63355677
=1.1791

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 - (148.678 + 331.108) / 572.725) / (1 - (128.465 + 336.889) / 563.506)
=0.16227509 / 0.17418093
=0.9316

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
=1293.158 / 1053.995
=1.2269

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))
=(23.651 / (23.651 + 336.889)) / (25.975 / (25.975 + 331.108))
=0.06559882 / 0.07274219
=0.9018

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)
=(777.268 / 1293.158) / (746.191 / 1053.995)
=0.6010619 / 0.70796446
=0.849

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)
=((36.758 + 176.652) / 572.725) / ((62.772 + 157.904) / 563.506)
=0.37262211 / 0.39161251
=0.9515

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
=(4.686 - -0.801 - 53.678) / 572.725
=-0.0841

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 -2.88 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

Dec03Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12
DSRI 1.02241.32280.72710.9940.87251.24730.7940.9733
GMI 1.01773.2271.02090.9841.00170.28611.02621.0966
AQI 0.92370.76610.94942.20260.37071.15891.54390.9399
SGI 1.22781.11111.19291.12961.06620.8461.06961.1386
DEPI 0.49950.86740.8441.30530.91951.26191.13540.8045
SGAI 0.96930.50240.51341.06421.03933.69630.97750.9051
LVGI 1.23151.25680.92451.03930.82680.79820.97150.8742
TATA 0.26790.1706-0.0548-0.06740.1119-0.22150.044-0.0403
M-score -1.15-0.22-2.73-2.20-2.23-4.11-2.14-2.51

Five Star Quality Care, Inc. Quarterly Data

Jun11Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13
DSRI 0.71731.1280.76710.93480.94870.88281.0090.65130.6710.67
GMI 0.52850.69791.06441.25390.85180.85510.88150.91971.14521.1791
AQI 1.09960.69091.54391.42441.80582.31820.93991.02820.89340.9316
SGI 0.85270.85081.10711.08111.05571.03651.09831.14471.18631.2269
DEPI 1.42681.62831.13541.21640.84990.65630.80450.7850.86620.9018
SGAI 1.92091.4390.94050.79381.19361.18321.14031.08880.86880.849
LVGI 0.86531.04550.97150.93280.98690.75590.87420.85290.83930.9515
TATA -0.1109-0.0520.0440.06140.03770.0938-0.0403-0.0311-0.0174-0.0841
M-score -3.66-3.04-2.10-1.79-2.10-1.65-2.66-2.84-2.60-2.88
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