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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 Roper Industries Inc was -2.03. The lowest was -2.87. And the median was -2.52.
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 Roper Industries 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 * 0.9464||+||0.528 * 0.9703||+||0.404 * 0.9867||+||0.892 * 1.1056||+||0.115 * 0.9646|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9844||+||4.679 * -0.0223||-||0.327 * 0.9067|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $529 Mil.|
Revenue was 884.122 + 885.175 + 834.052 + 889.173 = $3,493 Mil.
Gross Profit was 524.04 + 523.182 + 488.936 + 533.22 = $2,069 Mil.
Total Current Assets was $1,533 Mil.
Total Assets was $8,510 Mil.
Property, Plant and Equipment(Net PPE) was $115 Mil.
Depreciation, Depletion and Amortization(DDA) was $197 Mil.
Selling, General & Admin. Expense(SGA) was $1,096 Mil.
Total Current Liabilities was $662 Mil.
Long-Term Debt was $2,358 Mil.
Net Income was 155.51 + 157.361 + 147.226 + 165.703 = $626 Mil.
Non Operating Income was 0.552 + -0.93 + 1.42 + -0.645 = $0 Mil.
Cash Flow from Operations was 226.102 + 140.502 + 212.628 + 235.78 = $815 Mil.
|Accounts Receivable was $505 Mil.
Revenue was 827.81 + 784.01 + 737.135 + 809.91 = $3,159 Mil.
Gross Profit was 482.625 + 445.507 + 421.576 + 466.361 = $1,816 Mil.
Total Current Assets was $1,389 Mil.
Total Assets was $8,246 Mil.
Property, Plant and Equipment(Net PPE) was $118 Mil.
Depreciation, Depletion and Amortization(DDA) was $183 Mil.
Selling, General & Admin. Expense(SGA) was $1,007 Mil.
Total Current Liabilities was $634 Mil.
Long-Term Debt was $2,594 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)|
|=||(528.734 / 3492.522)||/||(505.284 / 3158.865)|
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)|
|=||(523.182 / 3158.865)||/||(524.04 / 3492.522)|
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 - (1532.691 + 115.243) / 8510.266)||/||(1 - (1389.199 + 117.785) / 8245.575)|
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))|
|=||(183.427 / (183.427 + 117.785))||/||(197.332 / (197.332 + 115.243))|
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)|
|=||(1095.565 / 3492.522)||/||(1006.555 / 3158.865)|
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)|
|=||((2358.474 + 662.005) / 8510.266)||/||((2593.607 + 634.137) / 8245.575)|
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|
|=||(625.8 - 0.397||-||815.012)||/||8510.266|
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.
Roper Industries Inc has a M-score of -2.53 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
Roper Industries Inc Annual Data
Roper Industries Inc Quarterly Data