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Rockwell Automation Inc (NYSE:ROK)
Beneish M-Score
-2.90 (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 -2.90 suggests that the company is not a manipulator.

ROK' s Beneish M-Score Range Over the Past 10 Years
Min: -3.01   Max: -1.31
Current: -2.9

-3.01
-1.31

During the past 13 years, the highest Beneish M-Score of Rockwell Automation Inc was -1.31. The lowest was -3.01. 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 * 0.8991+0.528 * 0.9702+0.404 * 1.0269+0.892 * 0.9524+0.115 * 0.9178
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0074+4.679 * -0.0537-0.327 * 1.0603
=-2.90

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $1,041 Mil.
Revenue was 1607.5 + 1575.2 + 1550.8 + 1574.4 = $6,308 Mil.
Gross Profit was 664.2 + 678.2 + 673.2 + 687.5 = $2,703 Mil.
Total Current Assets was $4,048 Mil.
Total Assets was $6,405 Mil.
Property, Plant and Equipment(Net PPE) was $606 Mil.
Depreciation, Depletion and Amortization(DDA) was $163 Mil.
Selling, General & Admin. Expense(SGA) was $1,506 Mil.
Total Current Liabilities was $1,328 Mil.
Long-Term Debt was $1,501 Mil.
Net Income was 201.3 + 206.1 + 206 + 214.2 = $828 Mil.
Non Operating Income was -18.6 + -0.8 + 1.4 + 1.8 = $-16 Mil.
Cash Flow from Operations was 348 + 286.3 + 285.2 + 268.2 = $1,188 Mil.
Accounts Receivable was $1,216 Mil.
Revenue was 1781.8 + 1649.5 + 1600.5 + 1591.7 = $6,624 Mil.
Gross Profit was 752.9 + 681.5 + 655.8 + 663.7 = $2,754 Mil.
Total Current Assets was $3,934 Mil.
Total Assets was $6,224 Mil.
Property, Plant and Equipment(Net PPE) was $633 Mil.
Depreciation, Depletion and Amortization(DDA) was $153 Mil.
Selling, General & Admin. Expense(SGA) was $1,570 Mil.
Total Current Liabilities was $1,692 Mil.
Long-Term Debt was $900 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)
=(1041 / 6307.9) / (1215.8 / 6623.5)
=0.16503115 / 0.18355854
=0.8991

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)
=(678.2 / 6623.5) / (664.2 / 6307.9)
=0.41577716 / 0.42852613
=0.9702

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 - (4048 + 605.6) / 6404.7) / (1 - (3934.2 + 632.9) / 6224.3)
=0.27340859 / 0.26624681
=1.0269

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
=6307.9 / 6623.5
=0.9524

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))
=(152.5 / (152.5 + 632.9)) / (162.5 / (162.5 + 605.6))
=0.19416858 / 0.21156099
=0.9178

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)
=(1506.4 / 6307.9) / (1570.1 / 6623.5)
=0.23881165 / 0.2370499
=1.0074

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)
=((1500.9 + 1327.7) / 6404.7) / ((900.4 + 1692.1) / 6224.3)
=0.44164442 / 0.4165127
=1.0603

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
=(827.6 - -16.2 - 1187.7) / 6404.7
=-0.0537

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 -2.90 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 0.83921.1360.90870.99511.0551.00211.07030.98440.9830.8991
GMI 0.97030.99491.02031.1340.90861.00080.98850.99460.97460.9702
AQI 1.27010.82850.95951.09030.89930.91150.94530.89871.00481.0269
SGI 1.10821.09821.13870.76041.12111.23541.04321.01481.04280.9524
DEPI 0.7051.06760.94910.98291.04961.01110.99251.00120.98240.9178
SGAI 1.03231.02041.0181.08970.96120.89380.97861.01580.97921.0074
LVGI 1.1551.09721.0160.8951.04160.9441.02220.96960.99371.0603
TATA 0.03320.2255-0.0069-0.0693-0.00340.01180.0055-0.0452-0.0332-0.0537
M-score -2.37-1.31-2.49-2.90-2.43-2.21-2.38-2.73-2.62-2.90

Rockwell Automation Inc Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 0.98441.00991.00950.97970.9830.92460.87710.93130.89910.9843
GMI 0.99460.98210.98460.97620.97460.96920.95870.95540.97020.9855
AQI 0.89870.89040.88530.89631.00480.98550.99130.96741.02691.0938
SGI 1.01481.02861.04741.04081.04281.02351.00370.98850.95240.9325
DEPI 1.00121.01551.00141.00810.98240.94460.93480.93260.91780.9381
SGAI 1.01581.00240.9920.99590.97920.99090.99390.99071.00741.0095
LVGI 0.96960.98181.01771.00060.99371.04911.04941.06551.06031.0382
TATA -0.0452-0.0462-0.0434-0.045-0.0332-0.0399-0.0487-0.0441-0.0537-0.045
M-score -2.73-2.71-2.69-2.73-2.62-2.76-2.87-2.82-2.90-2.76
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