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Rockwell Automation Inc (NYSE:ROK)
Beneish M-Score
-2.51 (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 -2.51 suggests that the company is not a manipulator.

ROK' s 10-Year Beneish M-Score Range
Min: -3.2   Max: -1.31
Current: -2.51

-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 * 1.0095+0.528 * 0.9846+0.404 * 1.0669+0.892 * 1.0474+0.115 * 1.0014
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.992+4.679 * -0.0418-0.327 * 0.7041
=-2.51

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
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 $3,598 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 $895 Mil.
Long-Term Debt was $905 Mil.
Net Income was 180.3 + 198.1 + 215.3 + 203.7 = $797 Mil.
Non Operating Income was 0.1 + 9.4 + -9.2 + 3.5 = $4 Mil.
Cash Flow from Operations was 202.8 + 203.5 + 351 + 293.9 = $1,051 Mil.
Accounts Receivable was $1,139 Mil.
Revenue was 1522.8 + 1489.2 + 1664 + 1560.4 = $6,236 Mil.
Gross Profit was 616.4 + 607.3 + 654.2 + 631.5 = $2,509 Mil.
Total Current Assets was $3,437 Mil.
Total Assets was $5,720 Mil.
Property, Plant and Equipment(Net PPE) was $585 Mil.
Depreciation, Depletion and Amortization(DDA) was $142 Mil.
Selling, General & Admin. Expense(SGA) was $1,507 Mil.
Total Current Liabilities was $1,470 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)
=(1204.4 / 6532.1) / (1139.1 / 6236.4)
=0.18438175 / 0.18265345
=1.0095

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)
=(663.7 / 6236.4) / (655.8 / 6532.1)
=0.40237958 / 0.4086894
=0.9846

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 - (3597.5 + 610.3) / 6158.1) / (1 - (3436.9 + 585) / 5719.9)
=0.31670483 / 0.29685834
=1.0669

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
=6532.1 / 6236.4
=1.0474

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))
=(142.2 / (142.2 + 585)) / (148.1 / (148.1 + 610.3))
=0.19554455 / 0.19527954
=1.0014

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)
=(1565.3 / 6532.1) / (1506.5 / 6236.4)
=0.23963197 / 0.24156565
=0.992

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)
=((905.4 + 894.9) / 6158.1) / ((905 + 1469.9) / 5719.9)
=0.29234667 / 0.41519957
=0.7041

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
=(797.4 - 3.8 - 1051.2) / 6158.1
=-0.0418

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 -2.51 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

Sep04Sep05Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13
DSRI 0.9531.19160.83921.1360.90870.99511.0551.00211.07030.9844
GMI 0.92710.87570.97030.99491.02031.1340.90861.00080.98850.9946
AQI 0.98771.05321.27010.82850.95951.09030.89930.91150.94530.8987
SGI 1.10490.93211.10821.09821.13870.76041.12111.23541.04321.0148
DEPI 0.90671.33340.7051.06760.94910.98291.04961.01110.99251.0012
SGAI 0.99011.01081.03231.02041.0181.08970.96120.89380.97861.0158
LVGI 0.96840.971.1551.09721.0160.8951.04160.9441.02220.9696
TATA -0.0436-0.02740.03320.2255-0.0069-0.0693-0.00340.01180.0055-0.0435
M-score -2.68-2.49-2.37-1.31-2.49-2.90-2.43-2.21-2.38-2.72

Rockwell Automation Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 1.00520.99431.07031.04890.98561.00590.98441.00991.00950.9797
GMI 0.97870.97670.98851.00841.0041.00840.99460.98210.98460.9762
AQI 0.92110.91310.94531.00091.00941.02120.89870.89041.06691.0754
SGI 1.13761.09591.04321.02721.0051.00811.01481.02861.04741.0408
DEPI 1.00150.98120.99250.97490.98760.98371.00121.01551.00141.0081
SGAI 0.94410.95470.97860.99081.00361.00991.01581.00240.9920.9959
LVGI 1.07811.08561.02220.91480.94540.93110.96960.98180.70410.6686
TATA 0.05150.0470.0058-0.0603-0.0516-0.0549-0.0435-0.0445-0.0418-0.0434
M-score -2.17-2.25-2.38-2.66-2.71-2.69-2.72-2.70-2.51-2.54
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