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Rockwell Automation Inc (NYSE:ROK)
Beneish M-Score
-2.66 (As of Today)

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.

Rockwell Automation Inc has a M-score of -2.65 suggests that the company is not a manipulator.

ROK' s Beneish M-Score Range Over the Past 10 Years
Min: -3.12   Max: -1.31
Current: -2.66

-3.12
-1.31

During the past 13 years, the highest Beneish M-Score of Rockwell Automation Inc was -1.31. The lowest was -3.12. And the median was -2.61.


Definition

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 Rockwell Automation 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 * 1.0508+0.528 * 1.0117+0.404 * 1.1181+0.892 * 0.9227+0.115 * 0.9146
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0104+4.679 * -0.0388-0.327 * 1.0408
=-2.65

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $1,028 Mil.
Revenue was 1440.3 + 1426.6 + 1607.5 + 1575.2 = $6,050 Mil.
Gross Profit was 594.1 + 612.7 + 664.2 + 678.2 = $2,549 Mil.
Total Current Assets was $4,063 Mil.
Total Assets was $6,540 Mil.
Property, Plant and Equipment(Net PPE) was $572 Mil.
Depreciation, Depletion and Amortization(DDA) was $169 Mil.
Selling, General & Admin. Expense(SGA) was $1,456 Mil.
Total Current Liabilities was $1,505 Mil.
Long-Term Debt was $1,513 Mil.
Net Income was 168 + 185.5 + 201.3 + 206.1 = $761 Mil.
Non Operating Income was -0.8 + 1.5 + -18.6 + -0.8 = $-19 Mil.
Cash Flow from Operations was 214.5 + 184.8 + 348 + 286.3 = $1,034 Mil.
Accounts Receivable was $1,060 Mil.
Revenue was 1550.8 + 1574.4 + 1781.8 + 1649.5 = $6,557 Mil.
Gross Profit was 673.2 + 687.5 + 752.9 + 681.5 = $2,795 Mil.
Total Current Assets was $4,046 Mil.
Total Assets was $6,280 Mil.
Property, Plant and Equipment(Net PPE) was $598 Mil.
Depreciation, Depletion and Amortization(DDA) was $158 Mil.
Selling, General & Admin. Expense(SGA) was $1,562 Mil.
Total Current Liabilities was $1,279 Mil.
Long-Term Debt was $1,505 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(1028 / 6049.6) / (1060.3 / 6556.5)
=0.16992859 / 0.16171738
=1.0508

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(612.7 / 6556.5) / (594.1 / 6049.6)
=0.42630977 / 0.42138323
=1.0117

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (4063 + 571.6) / 6539.6) / (1 - (4046 + 598) / 6280.2)
=0.29130222 / 0.2605331
=1.1181

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=6049.6 / 6556.5
=0.9227

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))
=(157.9 / (157.9 + 598)) / (169.2 / (169.2 + 571.6))
=0.20889006 / 0.22840173
=0.9146

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)
=(1455.7 / 6049.6) / (1561.5 / 6556.5)
=0.24062748 / 0.2381606
=1.0104

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)
=((1513.2 + 1504.9) / 6539.6) / ((1505.4 + 1279.3) / 6280.2)
=0.46151141 / 0.44340945
=1.0408

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(760.9 - -18.7 - 1033.6) / 6539.6
=-0.0388

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.

Rockwell Automation Inc has a M-score of -2.65 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Rockwell Automation Inc Annual Data

Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14Sep15
DSRI 0.83661.38660.90870.99511.0551.00211.07030.98440.9830.8991
GMI 0.95950.94141.02031.1340.90861.00080.98850.99460.97460.9702
AQI 1.27010.82850.95951.09030.89930.91150.94530.89871.00481.0269
SGI 1.11160.89981.13870.76041.12111.23541.04321.01481.04280.9524
DEPI 0.73321.31560.94910.98291.04961.01110.99251.00120.98240.9178
SGAI 1.02361.11431.0181.08970.96120.89380.97861.01580.97921.0074
LVGI 1.1551.09721.0160.8951.04160.9441.02220.96960.99371.0603
TATA 0.03670.2255-0.0008-0.0693-0.0043-0.0010.0055-0.0435-0.0347-0.0537
M-score -2.36-1.27-2.46-2.90-2.43-2.27-2.38-2.72-2.63-2.90

Rockwell Automation Inc Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 1.00991.00950.97970.9830.92460.87710.93130.89910.98431.0508
GMI 0.98210.98460.97620.97460.96920.95870.95540.97020.98551.0117
AQI 0.89040.88530.89631.00480.98550.99130.96741.02691.09381.1181
SGI 1.02861.04741.04081.04281.02351.00370.98850.95240.93250.9227
DEPI 1.01551.00141.00810.98240.94460.93480.93260.91780.93810.9146
SGAI 1.00240.9920.99590.97920.99090.99390.99071.00741.00951.0104
LVGI 0.98181.01771.00060.99371.04911.04941.06551.06031.03821.0408
TATA -0.0445-0.0418-0.0434-0.0332-0.0399-0.0487-0.0441-0.0537-0.045-0.0388
M-score -2.70-2.68-2.72-2.62-2.76-2.87-2.82-2.90-2.76-2.65
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