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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 Resource America Inc was 3.83. The lowest was -3.01. And the median was -1.97.
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 Resource America 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 * 0.8897||+||0.528 * 0.9747||+||0.404 * 1.0881||+||0.892 * 1.1053||+||0.115 * 0.9686|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9797||+||4.679 * -0.0507||-||0.327 * 1.0315|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $30.9 Mil.|
Revenue was 17.104 + 50.409 + 53.115 + 49.302 = $169.9 Mil.
Gross Profit was 1.585 + 38.088 + 41.108 + 35.935 = $116.7 Mil.
Total Current Assets was $261.2 Mil.
Total Assets was $2,900.8 Mil.
Property, Plant and Equipment(Net PPE) was $5.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.9 Mil.
Selling, General & Admin. Expense(SGA) was $11.1 Mil.
Total Current Liabilities was $25.3 Mil.
Long-Term Debt was $1,737.5 Mil.
Net Income was 1.744 + 1.516 + 2.718 + 0.99 = $7.0 Mil.
Non Operating Income was 26.271 + -1.776 + 2.908 + -1.148 = $26.3 Mil.
Cash Flow from Operations was 31.052 + 46.931 + -64.027 + 113.88 = $127.8 Mil.
|Accounts Receivable was $31.5 Mil.
Revenue was 33.911 + 43.025 + 33.485 + 43.327 = $153.7 Mil.
Gross Profit was 20.272 + 28.225 + 23.114 + 31.314 = $102.9 Mil.
Total Current Assets was $377.5 Mil.
Total Assets was $2,318.5 Mil.
Property, Plant and Equipment(Net PPE) was $5.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $2.1 Mil.
Selling, General & Admin. Expense(SGA) was $10.3 Mil.
Total Current Liabilities was $25.2 Mil.
Long-Term Debt was $1,340.6 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)|
|=||(30.939 / 169.93)||/||(31.464 / 153.748)|
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)|
|=||(38.088 / 153.748)||/||(1.585 / 169.93)|
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 - (261.249 + 5.063) / 2900.842)||/||(1 - (377.467 + 5.844) / 2318.451)|
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))|
|=||(2.14 / (2.14 + 5.844))||/||(1.937 / (1.937 + 5.063))|
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)|
|=||(11.118 / 169.93)||/||(10.268 / 153.748)|
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)|
|=||((1737.544 + 25.294) / 2900.842)||/||((1340.634 + 25.244) / 2318.451)|
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|
|=||(6.968 - 26.255||-||127.836)||/||2900.842|
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.
Resource America Inc has a M-score of -2.71 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
Resource America Inc Annual Data
Resource America Inc Quarterly Data