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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 Rockwell Automation Inc was -1.31. The lowest was -3.20. And the median was -2.60.
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|
|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
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)|
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)|
|=||(673.2 / 6557.4)||/||(678.2 / 6482.2)|
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 - (4174.9 + 590.7) / 6406.5)||/||(1 - (3907.7 + 610.4) / 6145.1)|
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))|
|=||(150.5 / (150.5 + 610.4))||/||(159 / (159 + 590.7))|
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)|
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)|
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|
|=||(875 - 1.3||-||1165.6)||/||6406.5|
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.
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
Rockwell Automation Inc Annual Data
Rockwell Automation Inc Quarterly Data