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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 Sturm Ruger & Co Inc was -1.78. The lowest was -4.85. And the median was -2.61.
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 Sturm Ruger & Co 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 * 1.4193||+||0.528 * 1.1892||+||0.404 * 0.7552||+||0.892 * 0.7374||+||0.115 * 0.8511|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.9174||+||4.679 * -0.2654||-||0.327 * 1.1079|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $54.1 Mil.|
Revenue was 140.872 + 136.954 + 122.605 + 98.327 = $498.8 Mil.
Gross Profit was 48.508 + 41.397 + 33.96 + 23.738 = $147.6 Mil.
Total Current Assets was $161.1 Mil.
Total Assets was $291.7 Mil.
Property, Plant and Equipment(Net PPE) was $109.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $36.7 Mil.
Selling, General & Admin. Expense(SGA) was $113.4 Mil.
Total Current Liabilities was $74.8 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 17.56 + 15.503 + -14.759 + 6.781 = $25.1 Mil.
Non Operating Income was 0.617 + 0.469 + -0.116 + 0.673 = $1.6 Mil.
Cash Flow from Operations was 48.081 + 32.783 + 24.597 + -4.622 = $100.8 Mil.
|Accounts Receivable was $51.7 Mil.
Revenue was 153.657 + 169.884 + 181.9 + 170.942 = $676.4 Mil.
Gross Profit was 50.353 + 61.123 + 63.632 + 62.94 = $238.0 Mil.
Total Current Assets was $150.4 Mil.
Total Assets was $283.7 Mil.
Property, Plant and Equipment(Net PPE) was $106.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $28.8 Mil.
Selling, General & Admin. Expense(SGA) was $80.2 Mil.
Total Current Liabilities was $65.7 Mil.
Long-Term Debt was $0.0 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)|
|=||(54.113 / 498.758)||/||(51.704 / 676.383)|
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)|
|=||(41.397 / 676.383)||/||(48.508 / 498.758)|
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 - (161.098 + 109.432) / 291.667)||/||(1 - (150.412 + 106.056) / 283.69)|
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))|
|=||(28.808 / (28.808 + 106.056))||/||(36.667 / (36.667 + 109.432))|
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)|
|=||(113.407 / 498.758)||/||(80.212 / 676.383)|
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)|
|=||((0 + 74.792) / 291.667)||/||((0 + 65.662) / 283.69)|
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|
|=||(25.085 - 1.643||-||100.839)||/||291.667|
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.
Sturm Ruger & Co Inc has a M-score of -3.78 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
Sturm Ruger & Co Inc Annual Data
Sturm Ruger & Co Inc Quarterly Data