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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 6.17. The lowest was -3.88. 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 * 1.0011||+||0.528 * 0.9328||+||0.404 * 0.9189||+||0.892 * 1.004||+||0.115 * 1.0503|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0575||+||4.679 * -0.1258||-||0.327 * 1.0256|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $831 Mil.|
Revenue was 1662.931 + 1567.153 + 1656.316 + 1687.15 = $6,574 Mil.
Gross Profit was 385.959 + 329.36 + 369.695 + 361.806 = $1,447 Mil.
Total Current Assets was $1,136 Mil.
Total Assets was $10,638 Mil.
Property, Plant and Equipment(Net PPE) was $8,562 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,125 Mil.
Selling, General & Admin. Expense(SGA) was $846 Mil.
Total Current Liabilities was $1,524 Mil.
Long-Term Debt was $4,869 Mil.
Net Income was 85.159 + 52.916 + 11.296 + 83.689 = $233 Mil.
Non Operating Income was 34.265 + 32.216 + 18.387 + 0.996 = $86 Mil.
Cash Flow from Operations was 380.82 + 277.878 + 395.335 + 431.768 = $1,486 Mil.
|Accounts Receivable was $827 Mil.
Revenue was 1684.571 + 1610.737 + 1617.729 + 1634.54 = $6,548 Mil.
Gross Profit was 348.062 + 304.26 + 344.802 + 347.078 = $1,344 Mil.
Total Current Assets was $1,137 Mil.
Total Assets was $9,688 Mil.
Property, Plant and Equipment(Net PPE) was $7,618 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,058 Mil.
Selling, General & Admin. Expense(SGA) was $797 Mil.
Total Current Liabilities was $1,517 Mil.
Long-Term Debt was $4,159 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)|
|=||(831.441 / 6573.55)||/||(827.274 / 6547.577)|
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)|
|=||(329.36 / 6547.577)||/||(385.959 / 6573.55)|
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 - (1135.916 + 8561.923) / 10638.264)||/||(1 - (1137.47 + 7618.179) / 9687.667)|
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))|
|=||(1058.098 / (1058.098 + 7618.179))||/||(1124.714 / (1124.714 + 8561.923))|
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)|
|=||(846.316 / 6573.55)||/||(797.158 / 6547.577)|
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)|
|=||((4869.208 + 1523.732) / 10638.264)||/||((4159.472 + 1516.68) / 9687.667)|
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|
|=||(233.06 - 85.864||-||1485.801)||/||10638.264|
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 -3.14 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