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Rockwell Automation Inc (NYSE:ROK)
Beneish M-Score
-2.72 (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 -2.72 suggests that the company is not a manipulator.

ROK' s 10-Year Beneish M-Score Range
Min: -3.23   Max: -1.47
Current: -2.72

-3.23
-1.47

During the past 13 years, the highest Beneish M-Score of Rockwell Automation Inc was -1.47. The lowest was -3.23. And the median was -2.64.


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 * 0.9797+0.528 * 0.9762+0.404 * 0.8963+0.892 * 1.0408+0.115 * 1.0081
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9959+4.679 * -0.0434-0.327 * 1.0006
=-2.72

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
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.
Net Income was 199.7 + 180.3 + 198.1 + 215.3 = $793 Mil.
Non Operating Income was 1.3 + 0.1 + 9.4 + -9.2 = $2 Mil.
Cash Flow from Operations was 301.1 + 202.8 + 203.5 + 351 = $1,058 Mil.
Accounts Receivable was $1,155 Mil.
Revenue was 1624.2 + 1522.8 + 1489.2 + 1664 = $6,300 Mil.
Gross Profit was 652.9 + 616.4 + 607.3 + 654.2 = $2,531 Mil.
Total Current Assets was $3,485 Mil.
Total Assets was $5,771 Mil.
Property, Plant and Equipment(Net PPE) was $581 Mil.
Depreciation, Depletion and Amortization(DDA) was $145 Mil.
Selling, General & Admin. Expense(SGA) was $1,520 Mil.
Total Current Liabilities was $1,552 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)
=(1177.8 / 6557.4) / (1155.1 / 6300.2)
=0.17961387 / 0.18334339
=0.9797

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)
=(655.8 / 6300.2) / (681.5 / 6557.4)
=0.40170153 / 0.41147406
=0.9762

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 - (3907.7 + 610.4) / 6145.1) / (1 - (3485.1 + 581.4) / 5771.3)
=0.2647638 / 0.29539272
=0.8963

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
=6557.4 / 6300.2
=1.0408

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))
=(144.8 / (144.8 + 581.4)) / (150.5 / (150.5 + 610.4))
=0.19939411 / 0.19779209
=1.0081

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)
=(1576 / 6557.4) / (1520.4 / 6300.2)
=0.24033916 / 0.24132567
=0.9959

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 + 1712.7) / 6145.1) / ((905.1 + 1552.3) / 5771.3)
=0.42604677 / 0.42579661
=1.0006

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
=(793.4 - 1.6 - 1058.4) / 6145.1
=-0.0434

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 -2.72 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 0.97920.97930.98931.17260.90870.99511.0551.00211.07030.9844
GMI 0.92980.93580.95950.94141.02031.1340.90861.00080.98850.9946
AQI 0.98141.05951.1460.91830.95951.09030.89930.91150.94530.8987
SGI 1.07481.13421.11160.89981.13870.76041.12111.23541.04321.0148
DEPI 0.93611.04050.97260.99180.94910.98291.04961.01110.99251.0012
SGAI 0.97810.93351.02361.11431.0181.08970.96120.89380.97861.0158
LVGI 0.97110.96721.1551.09721.0160.8951.04160.9441.02220.9696
TATA -0.0375-0.030.03670.2255-0.0008-0.0693-0.00430.01020.0055-0.0435
M-score -2.65-2.50-2.24-1.47-2.46-2.90-2.43-2.22-2.38-2.72

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 0.92110.91310.94531.00091.00941.02120.89870.89040.88530.8963
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 1.07811.08561.02220.91480.94540.93110.96960.98181.01771.0006
TATA 0.04990.04450.0055-0.0605-0.0519-0.0551-0.0437-0.0445-0.0418-0.0434
M-score -2.18-2.26-2.38-2.66-2.71-2.69-2.72-2.70-2.68-2.72
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