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Five Star Quality Care Inc (NYSE:FVE)
Beneish M-Score
-3.63 (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 -3.63 suggests that the company is not a manipulator.

FVE' s 10-Year Beneish M-Score Range
Min: -3.63   Max: 0.51
Current: -3.63

-3.63
0.51

During the past 13 years, the highest Beneish M-Score of Five Star Quality Care Inc was 0.51. The lowest was -3.63. And the median was -2.73.


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 * 1.0774+0.528 * 0.9953+0.404 * 0.624+0.892 * 0.9752+0.115 * 0.8906
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0355+4.679 * -0.2021-0.327 * 1.243
=-3.63

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $39 Mil.
Revenue was 332.526 + 334.339 + 332.799 + 328.411 = $1,328 Mil.
Gross Profit was 199.028 + 208.632 + 207.487 + 201.389 = $817 Mil.
Total Current Assets was $122 Mil.
Total Assets was $535 Mil.
Property, Plant and Equipment(Net PPE) was $357 Mil.
Depreciation, Depletion and Amortization(DDA) was $33 Mil.
Selling, General & Admin. Expense(SGA) was $803 Mil.
Total Current Liabilities was $215 Mil.
Long-Term Debt was $49 Mil.
Net Income was -73.748 + -3.008 + -1.891 + -6.759 = $-85 Mil.
Non Operating Income was 0.043 + 0.023 + 0.013 + 0.313 = $0 Mil.
Cash Flow from Operations was -5.946 + -6.741 + 26.042 + 8.982 = $22 Mil.
Accounts Receivable was $37 Mil.
Revenue was 325.814 + 324.112 + 351.858 + 360.052 = $1,362 Mil.
Gross Profit was 206.07 + 203.902 + 209.244 + 214.14 = $833 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 $795 Mil.
Total Current Liabilities was $199 Mil.
Long-Term Debt was $36 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)
=(38.814 / 1328.075) / (36.94 / 1361.836)
=0.02922576 / 0.02712515
=1.0774

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)
=(208.632 / 1361.836) / (199.028 / 1328.075)
=0.61193565 / 0.61482672
=0.9953

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 - (121.781 + 357.186) / 534.973) / (1 - (150.884 + 340.276) / 590.183)
=0.1046894 / 0.16778355
=0.624

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
=1328.075 / 1361.836
=0.9752

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))
=(28.109 / (28.109 + 340.276)) / (33.47 / (33.47 + 357.186))
=0.07630332 / 0.0856764
=0.8906

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)
=(803.293 / 1328.075) / (795.445 / 1361.836)
=0.60485515 / 0.5840975
=1.0355

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)
=((49.373 + 215.392) / 534.973) / ((36.461 + 198.528) / 590.183)
=0.49491283 / 0.39816294
=1.243

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
=(-85.406 - 0.392 - 22.337) / 534.973
=-0.2021

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 -3.63 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 1.02241.32280.72710.9940.85731.01420.95990.78450.72421.026
GMI 1.01773.2271.02090.9841.01450.93580.35571.02261.0031.0291
AQI 0.92370.76610.94942.20260.34331.25151.35811.13070.97390.624
SGI 1.22781.11111.19291.12961.08521.04041.03311.05390.961.0241
DEPI 0.49950.86740.8441.30530.91521.07491.29050.81250.91070.8906
SGAI 0.96930.50240.51341.06421.02821.01273.13320.97541.00531.0017
LVGI 1.23151.25680.92451.03930.80820.81660.96990.85281.02671.243
TATA 0.26790.1706-0.0548-0.0674-0.0622-0.22240.0359-0.0514-0.0633-0.2021
M-score -1.15-0.22-2.73-2.20-3.04-3.34-2.84-2.78-3.09-3.61

Five Star Quality Care Inc Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 0.84470.7650.81910.86970.67920.70790.69950.72770.98691.0774
GMI 0.84881.05411.23990.86670.87530.84910.83540.97210.96760.9953
AQI 2.31821.13071.07530.930.93160.97391.0281.00381.08750.624
SGI 1.08331.08071.06031.03381.02550.9820.94970.93420.94710.9752
DEPI 0.74180.81250.87280.9850.94390.91070.88940.88820.86420.8906
SGAI 1.20240.94550.79381.15991.15351.20041.23351.05421.06151.0355
LVGI 0.75590.85280.85640.84430.95151.02671.01951.14091.14481.243
TATA 0.0734-0.0514-0.0355-0.0128-0.083-0.0638-0.0976-0.1237-0.0707-0.2021
M-score -1.74-2.75-2.53-2.71-3.25-3.21-3.39-3.45-2.93-3.63
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