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Five Star Quality Care Inc (NYSE:FVE)
Beneish M-Score
-3.42 (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 -3.43 suggests that the company is not a manipulator.

FVE' s Beneish M-Score Range Over the Past 10 Years
Min: -3.97   Max: 0.51
Current: -3.42

-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 -2.76.


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 * 0.948+0.528 * 1.0096+0.404 * 0.6438+0.892 * 1.0281+0.115 * 1.0624
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9777+4.679 * -0.1589-0.327 * 1.1563
=-3.43

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

This Year (Dec15) TTM:Last Year (Dec14) TTM:
Accounts Receivable was $38 Mil.
Revenue was 344.596 + 344.572 + 342.269 + 333.973 = $1,365 Mil.
Gross Profit was 206.573 + 209.765 + 73.038 + 205.471 = $695 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 $673 Mil.
Total Current Liabilities was $244 Mil.
Long-Term Debt was $60 Mil.
Net Income was -6.383 + -27.488 + -3.91 + -5.302 = $-43 Mil.
Non Operating Income was 0.122 + 0 + 0.71 + 0.02 = $1 Mil.
Cash Flow from Operations was 4.836 + 11.746 + 7.97 + 15.988 = $41 Mil.
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 + 73.308 + 201.389 = $682 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 $669 Mil.
Total Current Liabilities was $215 Mil.
Long-Term Debt was $49 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)
=(37.829 / 1365.41) / (38.814 / 1328.075)
=0.02770523 / 0.02922576
=0.948

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)
=(209.765 / 1328.075) / (206.573 / 1365.41)
=0.51379403 / 0.50889257
=1.0096

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 - (112.069 + 383.858) / 531.77) / (1 - (121.781 + 357.186) / 534.973)
=0.0674032 / 0.1046894
=0.6438

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
=1365.41 / 1328.075
=1.0281

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))
=(33.47 / (33.47 + 357.186)) / (33.672 / (33.672 + 383.858))
=0.0856764 / 0.0806457
=1.0624

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)
=(672.567 / 1365.41) / (669.114 / 1328.075)
=0.49257512 / 0.50382245
=0.9777

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)
=((60.396 + 243.92) / 531.77) / ((49.373 + 215.392) / 534.973)
=0.57226997 / 0.49491283
=1.1563

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
=(-43.083 - 0.852 - 40.54) / 531.77
=-0.1589

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 -3.43 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 1.32280.72710.9940.87251.24730.59440.83520.87761.0260.948
GMI 3.2271.02090.9841.00170.28611.02541.10091.0711.02891.01
AQI 0.76610.94942.20260.37071.15891.54390.94921.02060.6240.6438
SGI 1.11111.19291.12961.06620.8461.071.13881.07371.02411.0281
DEPI 0.86740.8441.30530.91951.26191.13540.80450.88630.89061.0624
SGAI 0.50240.51341.06421.03933.69630.97720.90490.94171.00170.9795
LVGI 1.25680.92451.03930.82680.79820.97150.88770.98481.2431.1563
TATA 0.1706-0.0548-0.06740.1119-0.22150.0464-0.0424-0.0636-0.2021-0.1589
M-score -0.22-2.73-2.20-2.23-4.11-2.31-2.64-2.78-3.61-3.43

Five Star Quality Care Inc Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 0.56740.87760.83360.83960.91611.0261.01970.97361.03740.948
GMI 1.18131.0711.05591.2431.21641.23121.21761.01951.02451.0096
AQI 0.93161.02061.07511.04491.08750.6240.58920.59660.36940.6438
SGI 1.22761.07371.04921.03421.02041.02411.02481.02471.02471.0281
DEPI 0.87390.88630.90640.9340.91010.89060.88910.89490.93751.0624
SGAI 0.84940.94170.96870.8220.84140.83440.82710.99080.97730.9777
LVGI 0.95150.98481.02371.14771.14481.2431.28071.21151.26631.1563
TATA -0.0856-0.0636-0.0946-0.121-0.0719-0.2021-0.2137-0.1831-0.2779-0.1589
M-score -2.98-2.78-2.99-3.04-2.76-3.47-3.57-3.57-4.06-3.43
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