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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.
Sturm Ruger & Company has a M-score of -1.90 signals that the company is a manipulator.
During the past 13 years, the highest Beneish M-Score of Sturm Ruger & Company was -1.78. The lowest was -4.72. And the median was -2.60.
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 & Company 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 * 0.7936||+||0.528 * 1.0693||+||0.404 * 1.5802||+||0.892 * 1.1361||+||0.115 * 0.8801|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9057||+||4.679 * 0.0559||-||0.327 * 0.6645|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|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.
Net Income was 22.286 + 24.319 + 26.575 + 28.671 = $101.9 Mil.
Non Operating Income was 0.13 + 0.365 + -0.312 + 0.408 = $0.6 Mil.
Cash Flow from Operations was 19.866 + 15.71 + 35.929 + 13.901 = $85.4 Mil.
|Accounts Receivable was $57.3 Mil.
Revenue was 179.528 + 155.905 + 141.767 + 118.152 = $595.4 Mil.
Gross Profit was 70.724 + 61.309 + 49.461 + 42.565 = $224.1 Mil.
Total Current Assets was $146.4 Mil.
Total Assets was $236.5 Mil.
Property, Plant and Equipment(Net PPE) was $75.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $17.5 Mil.
Selling, General & Admin. Expense(SGA) was $78.0 Mil.
Total Current Liabilities was $82.4 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)|
|=||(51.704 / 676.383)||/||(57.344 / 595.352)|
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)|
|=||(61.123 / 595.352)||/||(50.353 / 676.383)|
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 - (150.412 + 106.056) / 283.69)||/||(1 - (146.38 + 75.799) / 236.543)|
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))|
|=||(17.548 / (17.548 + 75.799))||/||(28.808 / (28.808 + 106.056))|
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)|
|=||(80.212 / 676.383)||/||(77.952 / 595.352)|
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 + 65.662) / 283.69)||/||((0 + 82.396) / 236.543)|
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|
|=||(101.851 - 0.591||-||85.406)||/||283.69|
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 & Company has a M-score of -1.90 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
Sturm Ruger & Company Annual Data
Sturm Ruger & Company Quarterly Data