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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.
Renewable Energy Group Inc has a M-score of -2.40 suggests that the company is not a manipulator.
During the past 6 years, the highest Beneish M-Score of Renewable Energy Group Inc was 0.18. The lowest was -2.99. And the median was -1.90.
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 * 0.5368||+||0.528 * 2.1283||+||0.404 * 2.2731||+||0.892 * 0.9905||+||0.115 * 1.1052|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.4011||+||4.679 * -0.0502||-||0.327 * 1.9337|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $35 Mil.|
Revenue was 384.258 + 332.918 + 219.04 + 390.591 = $1,327 Mil.
Gross Profit was 22.715 + 15.151 + 11.564 + 44.708 = $94 Mil.
Total Current Assets was $253 Mil.
Total Assets was $1,056 Mil.
Property, Plant and Equipment(Net PPE) was $462 Mil.
Depreciation, Depletion and Amortization(DDA) was $13 Mil.
Selling, General & Admin. Expense(SGA) was $58 Mil.
Total Current Liabilities was $84 Mil.
Long-Term Debt was $249 Mil.
Net Income was 4.572 + 11.007 + -2.359 + 30.13 = $43 Mil.
Non Operating Income was 1.183 + 0.768 + 0.048 + 0.112 = $2 Mil.
Cash Flow from Operations was 47.181 + -0.647 + 24.82 + 22.846 = $94 Mil.
|Accounts Receivable was $67 Mil.
Revenue was 458.444 + 384.735 + 264.368 + 231.948 = $1,339 Mil.
Gross Profit was 57.849 + 50.181 + 86.695 + 7.549 = $202 Mil.
Total Current Assets was $302 Mil.
Total Assets was $686 Mil.
Property, Plant and Equipment(Net PPE) was $286 Mil.
Depreciation, Depletion and Amortization(DDA) was $9 Mil.
Selling, General & Admin. Expense(SGA) was $42 Mil.
Total Current Liabilities was $91 Mil.
Long-Term Debt was $21 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)|
|=||(35.422 / 1326.807)||/||(66.621 / 1339.495)|
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)|
|=||(15.151 / 1339.495)||/||(22.715 / 1326.807)|
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 - (253.238 + 462.053) / 1055.684)||/||(1 - (302.376 + 286.14) / 685.794)|
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))|
|=||(8.629 / (8.629 + 286.14))||/||(12.571 / (12.571 + 462.053))|
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)|
|=||(58.428 / 1326.807)||/||(42.1 / 1339.495)|
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)|
|=||((248.553 + 84.475) / 1055.684)||/||((21.36 + 90.522) / 685.794)|
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|
|=||(43.35 - 2.111||-||94.2)||/||1055.684|
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 -2.40 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