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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 -4.86. 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 * 0.9749||+||0.528 * 0.9179||+||0.404 * 1.0059||+||0.892 * 1.2317||+||0.115 * 0.958|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.583||+||4.679 * -0.0671||-||0.327 * 0.8971|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $65.0 Mil.|
Revenue was 167.944 + 173.109 + 152.396 + 120.871 = $614.3 Mil.
Gross Profit was 56.694 + 59.113 + 48.243 + 34.011 = $198.1 Mil.
Total Current Assets was $219.8 Mil.
Total Assets was $343.7 Mil.
Property, Plant and Equipment(Net PPE) was $98.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $35.1 Mil.
Selling, General & Admin. Expense(SGA) was $81.4 Mil.
Total Current Liabilities was $79.1 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 23.515 + 23.278 + 17.1 + 11.963 = $75.9 Mil.
Non Operating Income was 0.293 + 0.206 + 0.373 + 0.247 = $1.1 Mil.
Cash Flow from Operations was 36.662 + 29.429 + 17.62 + 14.085 = $97.8 Mil.
|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.
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)|
|=||(64.978 / 614.32)||/||(54.113 / 498.758)|
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)|
|=||(147.603 / 498.758)||/||(198.061 / 614.32)|
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 - (219.812 + 98.839) / 343.707)||/||(1 - (161.098 + 109.432) / 291.667)|
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))|
|=||(36.667 / (36.667 + 109.432))||/||(35.084 / (35.084 + 98.839))|
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)|
|=||(81.431 / 614.32)||/||(113.407 / 498.758)|
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 + 79.069) / 343.707)||/||((0 + 74.792) / 291.667)|
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|
|=||(75.856 - 1.119||-||97.796)||/||343.707|
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 -2.55 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