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Rockwell Automation Inc (NYSE:ROK)
Beneish M-Score
-2.83 (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 -2.83 suggests that the company is not a manipulator.

ROK' s 10-Year Beneish M-Score Range
Min: -3.2   Max: -1.31
Current: -2.83

-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 * 0.9313+0.528 * 0.9554+0.404 * 0.9674+0.892 * 0.9885+0.115 * 0.9326
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9907+4.679 * -0.0456-0.327 * 1.0655
=-2.83

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Accounts Receivable was $1,084 Mil.
Revenue was 1575.2 + 1550.8 + 1574.4 + 1781.8 = $6,482 Mil.
Gross Profit was 678.2 + 673.2 + 687.5 + 752.9 = $2,792 Mil.
Total Current Assets was $4,175 Mil.
Total Assets was $6,407 Mil.
Property, Plant and Equipment(Net PPE) was $591 Mil.
Depreciation, Depletion and Amortization(DDA) was $159 Mil.
Selling, General & Admin. Expense(SGA) was $1,544 Mil.
Total Current Liabilities was $1,416 Mil.
Long-Term Debt was $1,492 Mil.
Net Income was 206.1 + 206 + 214.2 + 248.7 = $875 Mil.
Non Operating Income was -0.8 + 1.4 + 1.8 + -1.1 = $1 Mil.
Cash Flow from Operations was 286.3 + 285.2 + 268.2 + 325.9 = $1,166 Mil.
Accounts Receivable was $1,178 Mil.
Revenue was 1649.5 + 1600.5 + 1591.7 + 1715.7 = $6,557 Mil.
Gross Profit was 681.5 + 655.8 + 663.7 + 697.2 = $2,698 Mil.
Total Current Assets was $3,908 Mil.
Total Assets was $6,145 Mil.
Property, Plant and Equipment(Net PPE) was $610 Mil.
Depreciation, Depletion and Amortization(DDA) was $151 Mil.
Selling, General & Admin. Expense(SGA) was $1,576 Mil.
Total Current Liabilities was $1,713 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)
=(1084.3 / 6482.2) / (1177.8 / 6557.4)
=0.16727346 / 0.17961387
=0.9313

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)
=(673.2 / 6557.4) / (678.2 / 6482.2)
=0.41147406 / 0.43068711
=0.9554

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 - (4174.9 + 590.7) / 6406.5) / (1 - (3907.7 + 610.4) / 6145.1)
=0.25613049 / 0.2647638
=0.9674

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
=6482.2 / 6557.4
=0.9885

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))
=(150.5 / (150.5 + 610.4)) / (159 / (159 + 590.7))
=0.19779209 / 0.21208483
=0.9326

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)
=(1543.5 / 6482.2) / (1576 / 6557.4)
=0.2381136 / 0.24033916
=0.9907

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)
=((1492.2 + 1416) / 6406.5) / ((905.4 + 1712.7) / 6145.1)
=0.45394521 / 0.42604677
=1.0655

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
=(875 - 1.3 - 1165.6) / 6406.5
=-0.0456

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 -2.83 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

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 0.98561.00590.98441.00991.00950.97970.9830.92460.87710.9313
GMI 1.0041.00840.99460.98210.98460.97620.97460.96920.95870.9554
AQI 1.00941.02120.89870.89040.88530.89631.00710.98550.99130.9674
SGI 1.0051.00811.01481.02861.04741.04081.04281.02351.00370.9885
DEPI 0.98760.98371.00121.01551.00141.00810.98240.94460.93480.9326
SGAI 1.00361.00991.01581.00240.9920.99590.97920.99090.99390.9907
LVGI 0.94540.93110.96960.98181.01771.00060.99491.04911.04941.0655
TATA -0.0516-0.0549-0.0452-0.0462-0.0434-0.045-0.0347-0.0415-0.0502-0.0456
M-score -2.71-2.69-2.73-2.71-2.69-2.73-2.63-2.77-2.87-2.83
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