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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 8 years, the highest Beneish M-Score of Renewable Energy Group Inc was 0.43. The lowest was -3.29. And the median was -2.14.
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 Renewable Energy Group 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 * 1.8329||+||0.528 * 0.9999||+||0.404 * 0.5201||+||0.892 * 1.1371||+||0.115 * 0.8215|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9837||+||4.679 * -0.1608||-||0.327 * 1.1498|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $106 Mil.|
Revenue was 305.594 + 387.808 + 394.856 + 373.762 = $1,462 Mil.
Gross Profit was 25.108 + 105.659 + 4.405 + 15.907 = $151 Mil.
Total Current Assets was $447 Mil.
Total Assets was $1,224 Mil.
Property, Plant and Equipment(Net PPE) was $601 Mil.
Depreciation, Depletion and Amortization(DDA) was $28 Mil.
Selling, General & Admin. Expense(SGA) was $76 Mil.
Total Current Liabilities was $287 Mil.
Long-Term Debt was $268 Mil.
Net Income was 1.656 + -95.609 + -15.675 + -2.001 = $-112 Mil.
Non Operating Income was -0.073 + -1.773 + 3.79 + 3.9 = $6 Mil.
Cash Flow from Operations was 163.286 + -18.897 + 48.774 + -113.739 = $79 Mil.
|Accounts Receivable was $51 Mil.
Revenue was 230.918 + 337.615 + 384.258 + 332.918 = $1,286 Mil.
Gross Profit was -16.195 + 111.182 + 22.715 + 15.151 = $133 Mil.
Total Current Assets was $428 Mil.
Total Assets was $1,278 Mil.
Property, Plant and Equipment(Net PPE) was $496 Mil.
Depreciation, Depletion and Amortization(DDA) was $19 Mil.
Selling, General & Admin. Expense(SGA) was $68 Mil.
Total Current Liabilities was $238 Mil.
Long-Term Debt was $266 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)|
|=||(106.35 / 1462.02)||/||(51.025 / 1285.709)|
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)|
|=||(105.659 / 1285.709)||/||(25.108 / 1462.02)|
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 - (447.456 + 600.53) / 1224.357)||/||(1 - (427.659 + 496.355) / 1277.94)|
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))|
|=||(18.639 / (18.639 + 496.355))||/||(27.676 / (27.676 + 600.53))|
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)|
|=||(75.733 / 1462.02)||/||(67.702 / 1285.709)|
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)|
|=||((268.04 + 286.745) / 1224.357)||/||((265.743 + 237.865) / 1277.94)|
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|
|=||(-111.629 - 5.844||-||79.424)||/||1224.357|
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.
Renewable Energy Group Inc has a M-score of -2.60 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
Renewable Energy Group Inc Annual Data
Renewable Energy Group Inc Quarterly Data