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Five Star Quality Care Inc (NYSE:FVE)
Beneish M-Score
-2.78 (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 -2.78 suggests that the company is not a manipulator.

FVE' s 10-Year Beneish M-Score Range
Min: -3.97   Max: 0.51
Current: -2.78

-3.97
0.51

During the past 13 years, the highest Beneish M-Score of Five Star Quality Care Inc was 0.51. The lowest was -3.97. And the median was -2.51.


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 * 0.8776+0.528 * 1.0709+0.404 * 1.0206+0.892 * 1.0737+0.115 * 0.8863
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9417+4.679 * -0.0633-0.327 * 0.9848
=-2.78

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $37 Mil.
Revenue was 325.814 + 324.112 + 323.261 + 323.6 = $1,297 Mil.
Gross Profit was 206.07 + 203.902 + 205.356 + 205.204 = $821 Mil.
Total Current Assets was $151 Mil.
Total Assets was $590 Mil.
Property, Plant and Equipment(Net PPE) was $340 Mil.
Depreciation, Depletion and Amortization(DDA) was $28 Mil.
Selling, General & Admin. Expense(SGA) was $783 Mil.
Total Current Liabilities was $199 Mil.
Long-Term Debt was $36 Mil.
Net Income was -5.08 + -0.198 + 0.798 + 2.14 = $-2 Mil.
Non Operating Income was -0.073 + -0.641 + -0.158 + 0.087 = $-1 Mil.
Cash Flow from Operations was -2.583 + 26.238 + 10.212 + 1.91 = $36 Mil.
Accounts Receivable was $39 Mil.
Revenue was 322.846 + 297.169 + 296.493 + 291.298 = $1,208 Mil.
Gross Profit was 202.827 + 205.343 + 206.598 + 203.633 = $818 Mil.
Total Current Assets was $160 Mil.
Total Assets was $595 Mil.
Property, Plant and Equipment(Net PPE) was $337 Mil.
Depreciation, Depletion and Amortization(DDA) was $24 Mil.
Selling, General & Admin. Expense(SGA) was $774 Mil.
Total Current Liabilities was $203 Mil.
Long-Term Debt was $38 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)
=(36.94 / 1296.787) / (39.205 / 1207.806)
=0.02848579 / 0.03245968
=0.8776

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)
=(203.902 / 1207.806) / (206.07 / 1296.787)
=0.67759309 / 0.63274231
=1.0709

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 - (150.884 + 340.276) / 590.183) / (1 - (159.686 + 337.494) / 594.991)
=0.16778355 / 0.16439072
=1.0206

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
=1296.787 / 1207.806
=1.0737

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))
=(24.48 / (24.48 + 337.494)) / (28.109 / (28.109 + 340.276))
=0.06762917 / 0.07630332
=0.8863

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)
=(783.062 / 1296.787) / (774.445 / 1207.806)
=0.60384782 / 0.64119983
=0.9417

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)
=((36.461 + 198.528) / 590.183) / ((37.621 + 202.95) / 594.991)
=0.39816294 / 0.40432712
=0.9848

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
=(-2.34 - -0.785 - 35.777) / 590.183
=-0.0633

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 -2.78 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

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 1.1280.57450.93480.94870.88280.86550.57610.59310.56740.8776
GMI 0.69791.06441.25390.85180.85510.88410.92241.14861.18261.0709
AQI 0.69091.54391.42441.80582.31820.94921.02820.89340.93161.0206
SGI 0.85081.10711.08111.05571.03651.09891.14531.18691.22751.0737
DEPI 1.62831.13541.21640.84990.65630.80450.7850.86620.90180.8863
SGAI 1.4390.94050.79381.19361.18321.13971.08830.86840.84860.9417
LVGI 1.04550.97150.93280.98690.75590.88770.85290.83930.95150.9848
TATA -0.0520.0440.06140.03770.0938-0.0422-0.0332-0.0196-0.0863-0.0633
M-score -3.04-2.28-1.79-2.10-1.65-2.80-2.92-2.68-2.98-2.78
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