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GuruFocus has detected 2 Warning Signs with Five Star Senior Living Inc $FVE.
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Five Star Senior Living Inc (NAS:FVE)
Beneish M-Score
-4.98 (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 Senior Living Inc has a M-score of -4.98 suggests that the company is not a manipulator.

FVE' s Beneish M-Score Range Over the Past 10 Years
Min: -4.98   Max: 0.54
Current: -4.98

-4.98
0.54

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.


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 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
=-4.98

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

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

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)
=(38.324 / 1378.108) / (37.829 / 1365.41)
=0.02780914 / 0.02770523
=1.0038

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)
=(22.508 / 1365.41) / (26.069 / 1378.108)
=0.01648443 / 0.01891651
=0.8714

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 - (129.387 + 351.929) / 509.734) / (1 - (112.069 + 383.858) / 531.77)
=0.05575065 / 0.0674032
=0.8271

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
=1378.108 / 1365.41
=1.0093

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))
=0.08096046 / 0.09757398
=0.8297

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)
=0.00253028 / 0.00016698
=15.1532

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)
=0.45413294 / 0.57226997
=0.7936

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
=(-21.813 - 0.107 - -23.453) / 509.734
=0.003

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.


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 local exchange's currency.

Five Star Senior Living Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.72710.9940.87251.24730.59440.83520.87761.0260.9481.0038
GMI 1.02090.9841.00170.28611.02541.10091.0712.96880.9960.9901
AQI 0.94942.20260.37071.15891.54390.94921.02060.6240.64380.8271
SGI 1.19291.12961.06620.8461.071.13881.07371.02411.02811.0093
DEPI 0.8441.30530.91951.26191.13540.80450.88630.93241.01080.8297
SGAI 0.51341.06421.03933.69630.97720.90490.94170.33640.9731.0104
LVGI 0.92451.03930.82680.79820.97150.88770.98481.2431.15630.7936
TATA -0.0548-0.0799-0.0555-0.22150.0464-0.0424-0.0636-0.2021-0.15890.003
M-score -2.73-2.26-3.01-4.11-2.31-2.64-2.78-2.47-3.44-2.48

Five Star Senior Living Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.91611.0261.01970.97361.03740.9480.92350.93560.98471.0038
GMI 1.21645.645842.563836.120534.34766.79720.73290.69360.72640.8714
AQI 1.08750.6240.58920.59660.36940.64380.64920.56840.87490.8271
SGI 1.02041.02411.02481.02471.02471.02811.03151.02471.01711.0093
DEPI 0.91010.93240.94020.94330.99181.01080.99260.86940.85430.8297
SGAI 0.84140.1690.00190.00540.00330.00160.50390.17952.460215.1529
LVGI 1.14481.2431.28071.21151.26631.15631.12570.9070.85780.7936
TATA -0.0719-0.2021-0.2137-0.1831-0.2779-0.1589-0.115-0.1053-0.03920.003
M-score -2.76-1.0218.4115.1413.71-0.21-3.30-3.19-3.08-4.98
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