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Beneish M-Score -0.43 higher than -2.22, which implies that it might have manipulated its financial results.
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.
Renewable Energy Group Inc has a M-score of -0.43 signals that the company is a manipulator.
During the past 6 years, the highest Beneish M-Score of Renewable Energy Group Inc was -0.43. The lowest was -2.79. And the median was -2.21.
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 * 2.8506||+||0.528 * 0.3775||+||0.404 * 0.6944||+||0.892 * 1.5498||+||0.115 * 1.0051|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.7016||+||4.679 * 0.0625||-||0.327 * 1.1055|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $83 Mil.|
Revenue was 390.591 + 458.444 + 384.735 + 339.284 = $1,573 Mil.
Gross Profit was 44.708 + 57.849 + 50.181 + 86.695 = $239 Mil.
Total Current Assets was $348 Mil.
Total Assets was $741 Mil.
Property, Plant and Equipment(Net PPE) was $291 Mil.
Depreciation, Depletion and Amortization(DDA) was $9 Mil.
Selling, General & Admin. Expense(SGA) was $46 Mil.
Total Current Liabilities was $98 Mil.
Long-Term Debt was $35 Mil.
Net Income was 30.13 + 86.703 + 23.13 + 46.403 = $186 Mil.
Non Operating Income was 0.112 + 0.066 + 0.093 + 0.117 = $0 Mil.
Cash Flow from Operations was 22.846 + 72.735 + 78.191 + -34.127 = $140 Mil.
|Accounts Receivable was $19 Mil.
Revenue was 231.948 + 322.912 + 271.927 + 188.247 = $1,015 Mil.
Gross Profit was 7.549 + 2.791 + 30.949 + 17.034 = $58 Mil.
Total Current Assets was $149 Mil.
Total Assets was $496 Mil.
Property, Plant and Equipment(Net PPE) was $248 Mil.
Depreciation, Depletion and Amortization(DDA) was $8 Mil.
Selling, General & Admin. Expense(SGA) was $42 Mil.
Total Current Liabilities was $40 Mil.
Long-Term Debt was $41 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)|
|=||(82.911 / 1573.054)||/||(18.768 / 1015.034)|
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)|
|=||(57.849 / 1015.034)||/||(44.708 / 1573.054)|
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 - (347.52 + 291.224) / 740.855)||/||(1 - (149.083 + 248.29) / 495.784)|
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))|
|=||(7.921 / (7.921 + 248.29))||/||(9.242 / (9.242 + 291.224))|
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)|
|=||(46.123 / 1573.054)||/||(42.422 / 1015.034)|
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)|
|=||((35.056 + 98.237) / 740.855)||/||((40.841 + 39.844) / 495.784)|
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|
|=||(186.366 - 0.388||-||139.645)||/||740.855|
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 -0.43 signals that the company is likely to 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