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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 3.35. The lowest was -3.74. And the median was -3.05.
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 * 0.9979||+||0.528 * 0.9194||+||0.404 * 0.9034||+||0.892 * 0.9932||+||0.115 * 1.0739|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0613||+||4.679 * -0.1145||-||0.327 * 1.047|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $814 Mil.|
Revenue was 1669.066 + 1662.931 + 1567.153 + 1656.316 = $6,555 Mil.
Gross Profit was 382.599 + 385.959 + 329.36 + 368.067 = $1,466 Mil.
Total Current Assets was $1,118 Mil.
Total Assets was $10,820 Mil.
Property, Plant and Equipment(Net PPE) was $8,749 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,155 Mil.
Selling, General & Admin. Expense(SGA) was $847 Mil.
Total Current Liabilities was $1,367 Mil.
Long-Term Debt was $5,145 Mil.
Net Income was 90.619 + 85.159 + 52.916 + 11.313 = $240 Mil.
Non Operating Income was 30.666 + 34.265 + 32.216 + -78.487 = $19 Mil.
Cash Flow from Operations was 412.638 + 380.82 + 277.878 + 388.947 = $1,460 Mil.
|Accounts Receivable was $821 Mil.
Revenue was 1687.15 + 1684.571 + 1610.737 + 1617.729 = $6,600 Mil.
Gross Profit was 362.492 + 348.062 + 304.26 + 342.275 = $1,357 Mil.
Total Current Assets was $1,122 Mil.
Total Assets was $9,604 Mil.
Property, Plant and Equipment(Net PPE) was $7,545 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,080 Mil.
Selling, General & Admin. Expense(SGA) was $804 Mil.
Total Current Liabilities was $1,476 Mil.
Long-Term Debt was $4,045 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)|
|=||(814.16 / 6555.466)||/||(821.446 / 6600.187)|
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)|
|=||(385.959 / 6600.187)||/||(382.599 / 6555.466)|
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 - (1117.527 + 8748.879) / 10820.186)||/||(1 - (1122.362 + 7544.881) / 9604.362)|
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))|
|=||(1079.876 / (1079.876 + 7544.881))||/||(1154.677 / (1154.677 + 8748.879))|
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)|
|=||(847.408 / 6555.466)||/||(803.941 / 6600.187)|
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)|
|=||((5144.938 + 1367.262) / 10820.186)||/||((4045.245 + 1475.573) / 9604.362)|
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|
|=||(240.007 - 18.66||-||1460.283)||/||10820.186|
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 -3.12 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