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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 3.34. The lowest was -3.73. 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 * 1.0073||+||0.528 * 0.9791||+||0.404 * 0.9841||+||0.892 * 1.0155||+||0.115 * 0.9624|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9968||+||4.679 * -0.1199||-||0.327 * 0.987|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $851 Mil.|
Revenue was 1703.744 + 1629.672 + 1672.743 + 1669.066 = $6,675 Mil.
Gross Profit was 386.835 + 346.567 + 386.774 + 382.599 = $1,503 Mil.
Total Current Assets was $1,126 Mil.
Total Assets was $11,136 Mil.
Property, Plant and Equipment(Net PPE) was $9,041 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,254 Mil.
Selling, General & Admin. Expense(SGA) was $857 Mil.
Total Current Liabilities was $2,018 Mil.
Long-Term Debt was $4,587 Mil.
Net Income was 73.75 + 55.794 + 76.201 + 90.619 = $296 Mil.
Non Operating Income was 17.456 + 21.394 + 16.593 + 30.666 = $86 Mil.
Cash Flow from Operations was 397.663 + 365.009 + 370.452 + 412.638 = $1,546 Mil.
|Accounts Receivable was $831 Mil.
Revenue was 1662.931 + 1567.153 + 1656.316 + 1687.15 = $6,574 Mil.
Gross Profit was 385.959 + 330.112 + 370.449 + 362.492 = $1,449 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 $1,137 Mil.
Selling, General & Admin. Expense(SGA) was $846 Mil.
Total Current Liabilities was $1,524 Mil.
Long-Term Debt was $4,869 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)|
|=||(850.504 / 6675.225)||/||(831.441 / 6573.55)|
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)|
|=||(1449.012 / 6573.55)||/||(1502.775 / 6675.225)|
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 - (1126.248 + 9041.13) / 11136.127)||/||(1 - (1135.916 + 8561.923) / 10638.264)|
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))|
|=||(1136.645 / (1136.645 + 8561.923))||/||(1253.729 / (1253.729 + 9041.13))|
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)|
|=||(856.685 / 6675.225)||/||(846.316 / 6573.55)|
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)|
|=||((4586.806 + 2018.06) / 11136.127)||/||((4869.208 + 1523.732) / 10638.264)|
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|
|=||(296.364 - 86.109||-||1545.762)||/||11136.127|
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 -3.04 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