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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 Ryder System Inc was -2.06. The lowest was -3.64. And the median was -3.03.
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 Ryder System 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 * 1.0105||+||0.528 * 1.0217||+||0.404 * 0.9549||+||0.892 * 1.0327||+||0.115 * 0.9555|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9662||+||4.679 * -0.1236||-||0.327 * 0.9732|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $740 Mil.|
Revenue was 1729.15 + 1724.418 + 1703.744 + 1629.672 = $6,787 Mil.
Gross Profit was 377.194 + 390.82 + 386.835 + 346.567 = $1,501 Mil.
Total Current Assets was $1,102 Mil.
Total Assets was $10,902 Mil.
Property, Plant and Equipment(Net PPE) was $8,894 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,255 Mil.
Selling, General & Admin. Expense(SGA) was $843 Mil.
Total Current Liabilities was $1,744 Mil.
Long-Term Debt was $4,600 Mil.
Net Income was 48.181 + 84.752 + 73.75 + 55.794 = $262 Mil.
Non Operating Income was -35.004 + 5.12 + 17.456 + 21.394 = $9 Mil.
Cash Flow from Operations was 416.278 + 422.072 + 397.663 + 365.009 = $1,601 Mil.
|Accounts Receivable was $709 Mil.
Revenue was 1672.743 + 1669.066 + 1662.931 + 1567.153 = $6,572 Mil.
Gross Profit was 386.774 + 382.599 + 385.959 + 330.112 = $1,485 Mil.
Total Current Assets was $1,098 Mil.
Total Assets was $10,953 Mil.
Property, Plant and Equipment(Net PPE) was $8,900 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,193 Mil.
Selling, General & Admin. Expense(SGA) was $844 Mil.
Total Current Liabilities was $1,680 Mil.
Long-Term Debt was $4,868 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)|
|=||(739.743 / 6786.984)||/||(708.832 / 6571.893)|
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)|
|=||(1485.444 / 6571.893)||/||(1501.416 / 6786.984)|
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 - (1101.557 + 8893.592) / 10902.454)||/||(1 - (1098.302 + 8899.705) / 10952.58)|
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))|
|=||(1192.728 / (1192.728 + 8899.705))||/||(1255.31 / (1255.31 + 8893.592))|
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)|
|=||(842.697 / 6786.984)||/||(844.497 / 6571.893)|
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)|
|=||((4599.864 + 1744.069) / 10902.454)||/||((4868.097 + 1680.255) / 10952.58)|
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|
|=||(262.477 - 8.966||-||1601.022)||/||10902.454|
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.
Ryder System Inc has a M-score of -3.02 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
Ryder System Inc Annual Data
Ryder System Inc Quarterly Data