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Rockwell Automation Inc (NYSE:ROK)
Beneish M-Score
-2.87 (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 -2.87 suggests that the company is not a manipulator.

ROK' s 10-Year Beneish M-Score Range
Min: -3.2   Max: -1.31
Current: -2.87

-3.2
-1.31

During the past 13 years, the highest Beneish M-Score of Rockwell Automation Inc was -1.31. The lowest was -3.20. And the median was -2.60.


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 * 0.8771+0.528 * 0.9587+0.404 * 0.9913+0.892 * 1.0037+0.115 * 0.9348
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9939+4.679 * -0.0502-0.327 * 1.0494
=-2.87

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

This Year (Mar15) TTM:Last Year (Mar14) TTM:
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.
Net Income was 206 + 214.2 + 248.7 + 199.7 = $869 Mil.
Non Operating Income was 1.4 + 1.8 + -1.1 + 1.3 = $3 Mil.
Cash Flow from Operations was 285.2 + 268.2 + 325.9 + 301.1 = $1,180 Mil.
Accounts Receivable was $1,204 Mil.
Revenue was 1600.5 + 1591.7 + 1715.7 + 1624.2 = $6,532 Mil.
Gross Profit was 655.8 + 663.7 + 697.2 + 652.9 = $2,670 Mil.
Total Current Assets was $3,929 Mil.
Total Assets was $6,158 Mil.
Property, Plant and Equipment(Net PPE) was $610 Mil.
Depreciation, Depletion and Amortization(DDA) was $148 Mil.
Selling, General & Admin. Expense(SGA) was $1,565 Mil.
Total Current Liabilities was $1,697 Mil.
Long-Term Debt was $905 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)
=(1060.3 / 6556.5) / (1204.4 / 6532.1)
=0.16171738 / 0.18438175
=0.8771

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)
=(687.5 / 6532.1) / (673.2 / 6556.5)
=0.4086894 / 0.42630977
=0.9587

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 - (4046 + 598) / 6280.2) / (1 - (3929.4 + 610.3) / 6158.1)
=0.2605331 / 0.26280833
=0.9913

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
=6556.5 / 6532.1
=1.0037

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))
=(148.1 / (148.1 + 610.3)) / (157.9 / (157.9 + 598))
=0.19527954 / 0.20889006
=0.9348

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)
=(1561.5 / 6556.5) / (1565.3 / 6532.1)
=0.2381606 / 0.23963197
=0.9939

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)
=((1505.4 + 1279.3) / 6280.2) / ((905.4 + 1696.7) / 6158.1)
=0.44340945 / 0.42254916
=1.0494

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
=(868.6 - 3.4 - 1180.4) / 6280.2
=-0.0502

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 -2.87 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

Sep05Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14
DSRI 1.19160.83921.1360.90870.99511.0551.00211.07030.98440.983
GMI 0.87570.97030.99491.02031.1340.90861.00080.98850.99460.9746
AQI 1.05321.27010.82850.95951.09030.89930.91150.94530.89871.0071
SGI 0.93211.10821.09821.13870.76041.12111.23541.04321.01481.0428
DEPI 1.33340.7051.06760.94910.98291.04961.01110.99251.00120.9824
SGAI 1.01081.03231.02041.0181.08970.96120.89380.97861.01580.9792
LVGI 0.971.1551.09721.0160.8951.04160.9441.02220.96960.9949
TATA -0.02740.03320.2255-0.0069-0.0693-0.00340.01180.0055-0.0452-0.0347
M-score -2.49-2.37-1.31-2.49-2.90-2.43-2.21-2.38-2.73-2.63

Rockwell Automation Inc Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 1.04890.98561.00590.98441.00991.00950.97970.9830.92460.8771
GMI 1.00841.0041.00840.99460.98210.98460.97620.97460.96920.9587
AQI 1.00091.00941.02120.89870.89040.88530.89631.00710.98550.9913
SGI 1.02721.0051.00811.01481.02861.04741.04081.04281.02351.0037
DEPI 0.97490.98760.98371.00121.01551.00141.00810.98240.94460.9348
SGAI 0.99081.00361.00991.01581.00240.9920.99590.97920.99090.9939
LVGI 0.91480.94540.93110.96960.98181.01771.00060.99491.04911.0494
TATA -0.0603-0.0516-0.0549-0.0452-0.0462-0.0434-0.045-0.0347-0.0415-0.0502
M-score -2.66-2.71-2.69-2.73-2.71-2.69-2.73-2.63-2.77-2.87
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