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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 Prologis Inc was 2.00. The lowest was -2.93. And the median was -2.57.
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 Prologis 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 * 0.9526||+||0.528 * 0.9861||+||0.404 * 0.9929||+||0.892 * 1.0059||+||0.115 * 1.0948|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0747||+||4.679 * -0.0289||-||0.327 * 0.9948|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $103 Mil.|
Revenue was 450.865 + 415.151 + 460.089 + 434.682 = $1,761 Mil.
Gross Profit was 320.441 + 290.385 + 322.676 + 300.002 = $1,234 Mil.
Total Current Assets was $454 Mil.
Total Assets was $25,818 Mil.
Property, Plant and Equipment(Net PPE) was $19,399 Mil.
Depreciation, Depletion and Amortization(DDA) was $642 Mil.
Selling, General & Admin. Expense(SGA) was $248 Mil.
Total Current Liabilities was $628 Mil.
Long-Term Debt was $9,380 Mil.
Net Income was 410.287 + 137.915 + 81.18 + 6.801 = $636 Mil.
Non Operating Income was 418.363 + 114.287 + 123.306 + 21.258 = $677 Mil.
Cash Flow from Operations was 253.744 + 144.921 + 233.623 + 72.243 = $705 Mil.
|Accounts Receivable was $108 Mil.
Revenue was 436.764 + 423.058 + 410.693 + 479.971 = $1,750 Mil.
Gross Profit was 309.487 + 294.224 + 275.85 + 329.708 = $1,209 Mil.
Total Current Assets was $599 Mil.
Total Assets was $24,572 Mil.
Property, Plant and Equipment(Net PPE) was $18,255 Mil.
Depreciation, Depletion and Amortization(DDA) was $664 Mil.
Selling, General & Admin. Expense(SGA) was $229 Mil.
Total Current Liabilities was $564 Mil.
Long-Term Debt was $9,011 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)|
|=||(103.445 / 1760.787)||/||(107.955 / 1750.486)|
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)|
|=||(290.385 / 1750.486)||/||(320.441 / 1760.787)|
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 - (454.137 + 19399.364) / 25818.223)||/||(1 - (599.084 + 18255.479) / 24572.307)|
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))|
|=||(664.007 / (664.007 + 18255.479))||/||(642.461 / (642.461 + 19399.364))|
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)|
|=||(247.768 / 1760.787)||/||(229.207 / 1750.486)|
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)|
|=||((9380.199 + 627.999) / 25818.223)||/||((9011.216 + 563.993) / 24572.307)|
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|
|=||(636.183 - 677.214||-||704.531)||/||25818.223|
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.
Prologis Inc has a M-score of -2.66 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
Prologis Inc Annual Data
Prologis Inc Quarterly Data