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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.
During the past 12 years, the highest Beneish M-Score of Five Star Quality Care Inc was 0.00. The lowest was 0.00. And the median was 0.00.
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|
|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
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)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(205.356 / 1053.995)||/||(203.902 / 1293.158)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|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)|
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.
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))|
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)|
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)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(4.686 - -0.801||-||53.678)||/||572.725|
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.
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
Five Star Quality Care Inc Annual Data
Five Star Quality Care Inc Quarterly Data