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Beneish M-Score 0.57 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.
During the past 7 years, the highest Beneish M-Score of Renewable Energy Group Inc was 0.57. The lowest was -2.79. And the median was -1.33.
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 * 4.4116||+||0.528 * 1.2072||+||0.404 * 1.8563||+||0.892 * 0.8098||+||0.115 * 0.9911|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.6782||+||4.679 * 0.0312||-||0.327 * 2.2334|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $295 Mil.|
Revenue was 337.615 + 384.258 + 332.918 + 219.04 = $1,274 Mil.
Gross Profit was 111.182 + 22.715 + 15.151 + 11.564 = $161 Mil.
Total Current Assets was $528 Mil.
Total Assets was $1,373 Mil.
Property, Plant and Equipment(Net PPE) was $493 Mil.
Depreciation, Depletion and Amortization(DDA) was $16 Mil.
Selling, General & Admin. Expense(SGA) was $63 Mil.
Total Current Liabilities was $285 Mil.
Long-Term Debt was $266 Mil.
Net Income was 69.391 + 4.572 + 11.007 + -2.359 = $83 Mil.
Non Operating Income was 5.294 + 1.183 + 0.768 + 0.048 = $7 Mil.
Cash Flow from Operations was -38.826 + 47.181 + -0.647 + 24.82 = $33 Mil.
|Accounts Receivable was $82 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.
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)|
|=||(294.669 / 1273.831)||/||(82.485 / 1573.054)|
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)|
|=||(22.715 / 1573.054)||/||(111.182 / 1273.831)|
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 - (528.443 + 493.196) / 1372.888)||/||(1 - (347.52 + 291.224) / 740.855)|
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))|
|=||(9.242 / (9.242 + 291.224))||/||(15.796 / (15.796 + 493.196))|
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)|
|=||(62.681 / 1273.831)||/||(46.123 / 1573.054)|
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)|
|=||((266.353 + 285.311) / 1372.888)||/||((35.056 + 98.237) / 740.855)|
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|
|=||(82.611 - 7.293||-||32.528)||/||1372.888|
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 0.57 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