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Rockwell Automation Inc (NYSE:ROK)
Beneish M-Score
-2.63 (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 -2.63 suggests that the company is not a manipulator.

ROK' s 10-Year Beneish M-Score Range
Min: -3.15   Max: -1.47
Current: -2.63

-3.15
-1.47

During the past 13 years, the highest Beneish M-Score of Rockwell Automation Inc was -1.47. The lowest was -3.15. And the median was -2.62.


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 * 0.983+0.528 * 0.9746+0.404 * 1.0071+0.892 * 1.0428+0.115 * 0.9824
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9792+4.679 * -0.0347-0.327 * 0.9949
=-2.63

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
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 $6,230 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 $906 Mil.
Net Income was 248.7 + 199.7 + 180.3 + 198.1 = $827 Mil.
Non Operating Income was -1.1 + 1.3 + 0.1 + 9.4 = $10 Mil.
Cash Flow from Operations was 325.9 + 301.1 + 202.8 + 203.5 = $1,033 Mil.
Accounts Receivable was $1,186 Mil.
Revenue was 1715.7 + 1624.2 + 1522.8 + 1489.2 = $6,352 Mil.
Gross Profit was 697.2 + 652.9 + 616.4 + 607.3 = $2,574 Mil.
Total Current Assets was $3,680 Mil.
Total Assets was $5,845 Mil.
Property, Plant and Equipment(Net PPE) was $616 Mil.
Depreciation, Depletion and Amortization(DDA) was $145 Mil.
Selling, General & Admin. Expense(SGA) was $1,538 Mil.
Total Current Liabilities was $1,545 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)
=(1215.8 / 6623.5) / (1186.1 / 6351.9)
=0.18355854 / 0.18673153
=0.983

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)
=(681.5 / 6351.9) / (752.9 / 6623.5)
=0.40520159 / 0.41577716
=0.9746

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 - (3934.2 + 632.9) / 6229.5) / (1 - (3679.9 + 616) / 5844.6)
=0.2668593 / 0.26497964
=1.0071

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
=6623.5 / 6351.9
=1.0428

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))
=(145.2 / (145.2 + 616)) / (152.5 / (152.5 + 632.9))
=0.19075145 / 0.19416858
=0.9824

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)
=(1570.1 / 6623.5) / (1537.7 / 6351.9)
=0.2370499 / 0.24208505
=0.9792

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)
=((905.6 + 1692.1) / 6229.5) / ((905.1 + 1544.7) / 5844.6)
=0.41699976 / 0.41915614
=0.9949

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
=(826.8 - 9.7 - 1033.3) / 6229.5
=-0.0347

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 -2.63 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 0.97930.98931.17260.90870.99511.0551.00211.07030.98440.983
GMI 0.93580.95950.94141.02031.1340.90861.00080.98850.99460.9746
AQI 1.05951.1460.91830.95951.09030.89930.91150.94530.89871.0071
SGI 1.13421.11160.89981.13870.76041.12111.23541.04321.01481.0428
DEPI 1.04050.97260.99180.94910.98291.04961.01110.99251.00120.9824
SGAI 0.93351.02361.11431.0181.08970.96120.89380.97861.01580.9792
LVGI 0.96721.1551.09721.0160.8951.04160.9441.02220.96960.9949
TATA -0.030.03670.2255-0.0008-0.0693-0.00430.01020.0055-0.0452-0.0347
M-score -2.50-2.24-1.47-2.46-2.90-2.43-2.22-2.38-2.73-2.63

Rockwell Automation Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.99431.07031.04890.98561.00590.98441.00991.00950.97970.983
GMI 0.97670.98851.00841.0041.00840.99460.98210.98460.97620.9746
AQI 0.91310.94531.00091.00941.02120.89870.89040.88530.89631.0071
SGI 1.09591.04321.02721.0051.00811.01481.02861.04741.04081.0428
DEPI 0.98120.99250.97490.98760.98371.00121.01551.00141.00810.9824
SGAI 0.95470.97860.99081.00361.00991.01581.00240.9920.99590.9792
LVGI 1.08561.02220.91480.94540.93110.96960.98181.01771.00060.9949
TATA 0.04450.0055-0.0605-0.0519-0.0551-0.0454-0.0462-0.0434-0.045-0.0347
M-score -2.26-2.38-2.66-2.71-2.69-2.73-2.71-2.69-2.73-2.63
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