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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 Monro Muffler Brake Inc was -0.12. The lowest was -3.17. And the median was -2.60.
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 Monro Muffler Brake 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 * 1.3586||+||0.528 * 0.9886||+||0.404 * 1.1056||+||0.892 * 1.0839||+||0.115 * 0.9853|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0013||+||4.679 * -0.0662||-||0.327 * 1.0515|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $4.1 Mil.|
Revenue was 236.52 + 219.134 + 236.553 + 221.299 = $913.5 Mil.
Gross Profit was 99.718 + 83.659 + 90.196 + 89.472 = $363.0 Mil.
Total Current Assets was $181.7 Mil.
Total Assets was $932.2 Mil.
Property, Plant and Equipment(Net PPE) was $328.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $37.1 Mil.
Selling, General & Admin. Expense(SGA) was $249.1 Mil.
Total Current Liabilities was $161.9 Mil.
Long-Term Debt was $249.7 Mil.
Net Income was 18.799 + 12.551 + 15.986 + 16.33 = $63.7 Mil.
Non Operating Income was 0.106 + 1.719 + -0.506 + 0.227 = $1.5 Mil.
Cash Flow from Operations was 31.621 + 37.733 + 33.94 + 20.57 = $123.9 Mil.
|Accounts Receivable was $2.8 Mil.
Revenue was 217.507 + 203.244 + 216.695 + 205.321 = $842.8 Mil.
Gross Profit was 90.022 + 77.024 + 82.324 + 81.748 = $331.1 Mil.
Total Current Assets was $168.6 Mil.
Total Assets was $777.6 Mil.
Property, Plant and Equipment(Net PPE) was $290.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $32.3 Mil.
Selling, General & Admin. Expense(SGA) was $229.5 Mil.
Total Current Liabilities was $142.2 Mil.
Long-Term Debt was $184.4 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)|
|=||(4.085 / 913.506)||/||(2.774 / 842.767)|
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)|
|=||(83.659 / 842.767)||/||(99.718 / 913.506)|
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 - (181.728 + 328.645) / 932.208)||/||(1 - (168.602 + 290.77) / 777.638)|
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))|
|=||(32.318 / (32.318 + 290.77))||/||(37.135 / (37.135 + 328.645))|
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)|
|=||(249.059 / 913.506)||/||(229.469 / 842.767)|
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)|
|=||((249.662 + 161.941) / 932.208)||/||((184.38 + 142.155) / 777.638)|
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|
|=||(63.666 - 1.546||-||123.864)||/||932.208|
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.
Monro Muffler Brake Inc has a M-score of -2.37 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
Monro Muffler Brake Inc Annual Data
Monro Muffler Brake Inc Quarterly Data