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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 -4.39. And the median was -2.24.
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 * 0.7969||+||0.528 * 1.0705||+||0.404 * 1.0583||+||0.892 * 0.9618||+||0.115 * 1.1043|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1156||+||4.679 * -0.0377||-||0.327 * 1.0704|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $27.6 Mil.|
Revenue was 45.996 + 42.189 + 17.104 + 50.409 = $155.7 Mil.
Gross Profit was 30.302 + 27.121 + 1.585 + 38.088 = $97.1 Mil.
Total Current Assets was $243.0 Mil.
Total Assets was $2,942.7 Mil.
Property, Plant and Equipment(Net PPE) was $5.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.9 Mil.
Selling, General & Admin. Expense(SGA) was $12.7 Mil.
Total Current Liabilities was $26.0 Mil.
Long-Term Debt was $1,848.8 Mil.
Net Income was -1.652 + 0.337 + 1.744 + 1.516 = $1.9 Mil.
Non Operating Income was 6.426 + 16.363 + 26.271 + -1.776 = $47.3 Mil.
Cash Flow from Operations was 113.37 + -125.861 + 31.052 + 46.931 = $65.5 Mil.
|Accounts Receivable was $36.0 Mil.
Revenue was 42.335 + 42.616 + 33.911 + 43.025 = $161.9 Mil.
Gross Profit was 30.328 + 29.249 + 20.272 + 28.225 = $108.1 Mil.
Total Current Assets was $362.0 Mil.
Total Assets was $2,723.4 Mil.
Property, Plant and Equipment(Net PPE) was $5.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $2.1 Mil.
Selling, General & Admin. Expense(SGA) was $11.8 Mil.
Total Current Liabilities was $20.5 Mil.
Long-Term Debt was $1,600.5 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)|
|=||(27.581 / 155.698)||/||(35.986 / 161.887)|
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)|
|=||(27.121 / 161.887)||/||(30.302 / 155.698)|
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 - (242.992 + 5.622) / 2942.705)||/||(1 - (362.026 + 5.378) / 2723.446)|
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))|
|=||(2.136 / (2.136 + 5.378))||/||(1.949 / (1.949 + 5.622))|
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)|
|=||(12.713 / 155.698)||/||(11.849 / 161.887)|
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)|
|=||((1848.822 + 25.989) / 2942.705)||/||((1600.543 + 20.454) / 2723.446)|
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|
|=||(1.945 - 47.284||-||65.492)||/||2942.705|
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 -2.85 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