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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.
During the past 13 years, the highest Beneish M-Score of Five Star Senior Living Inc was 0.54. The lowest was -4.98. And the median was -2.73.
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 Senior Living 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 * 1.0038||+||0.528 * 0.8714||+||0.404 * 0.8271||+||0.892 * 1.0093||+||0.115 * 0.8297|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 15.1532||+||4.679 * 0.003||-||0.327 * 0.7936|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $38 Mil.|
Revenue was 346.252 + 344.711 + 342.933 + 344.212 = $1,378 Mil.
Gross Profit was -335.148 + 209.856 + 74.012 + 77.349 = $26 Mil.
Total Current Assets was $129 Mil.
Total Assets was $510 Mil.
Property, Plant and Equipment(Net PPE) was $352 Mil.
Depreciation, Depletion and Amortization(DDA) was $38 Mil.
Selling, General & Admin. Expense(SGA) was $3 Mil.
Total Current Liabilities was $173 Mil.
Long-Term Debt was $58 Mil.
Net Income was -5.627 + -5.897 + -7.666 + -2.623 = $-22 Mil.
Non Operating Income was -0.14 + 0.012 + 0.344 + -0.109 = $0 Mil.
Cash Flow from Operations was -16.474 + -4.041 + 1.724 + -4.662 = $-23 Mil.
|Accounts Receivable was $38 Mil.
Revenue was 344.596 + 344.572 + 342.269 + 333.973 = $1,365 Mil.
Gross Profit was -332.513 + 209.765 + 73.038 + 72.218 = $23 Mil.
Total Current Assets was $112 Mil.
Total Assets was $532 Mil.
Property, Plant and Equipment(Net PPE) was $384 Mil.
Depreciation, Depletion and Amortization(DDA) was $34 Mil.
Selling, General & Admin. Expense(SGA) was $0 Mil.
Total Current Liabilities was $244 Mil.
Long-Term Debt was $60 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)|
|=||(38.324 / 1378.108)||/||(37.829 / 1365.41)|
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)|
|=||(22.508 / 1365.41)||/||(26.069 / 1378.108)|
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 - (129.387 + 351.929) / 509.734)||/||(1 - (112.069 + 383.858) / 531.77)|
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))|
|=||(33.815 / (33.815 + 383.858))||/||(38.052 / (38.052 + 351.929))|
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)|
|=||(3.487 / 1378.108)||/||(0.228 / 1365.41)|
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)|
|=||((58.494 + 172.993) / 509.734)||/||((60.396 + 243.92) / 531.77)|
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|
|=||(-21.813 - 0.107||-||-23.453)||/||509.734|
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 Senior Living Inc has a M-score of -4.98 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 Senior Living Inc Annual Data
Five Star Senior Living Inc Quarterly Data