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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.
Roper Industries Inc has a M-score of -2.60 suggests that the company is not a manipulator.
During the past 11 years, the highest Beneish M-Score of Roper Industries Inc was -2.04. The lowest was -3.88. And the median was -2.54.
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 * 0.8864||+||0.528 * 0.9631||+||0.404 * 0.9723||+||0.892 * 1.1161||+||0.115 * 0.957|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9913||+||4.679 * -0.0288||-||0.327 * 0.8458|
* 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 $625 Mil.|
Revenue was 885.175 + 834.052 + 889.173 + 827.81 = $3,436 Mil.
Gross Profit was 523.182 + 488.936 + 533.22 + 482.625 = $2,028 Mil.
Total Current Assets was $1,525 Mil.
Total Assets was $8,262 Mil.
Property, Plant and Equipment(Net PPE) was $116 Mil.
Depreciation, Depletion and Amortization(DDA) was $196 Mil.
Selling, General & Admin. Expense(SGA) was $1,080 Mil.
Total Current Liabilities was $635 Mil.
Long-Term Debt was $2,234 Mil.
Net Income was 157.361 + 147.226 + 165.703 + 136.323 = $607 Mil.
Non Operating Income was -0.93 + 1.42 + -0.645 + 0.409 = $0 Mil.
Cash Flow from Operations was 140.502 + 212.628 + 235.78 + 255.766 = $845 Mil.
|Accounts Receivable was $632 Mil.
Revenue was 784.01 + 737.135 + 809.91 + 747.641 = $3,079 Mil.
Gross Profit was 445.507 + 421.576 + 466.361 + 416.555 = $1,750 Mil.
Total Current Assets was $1,328 Mil.
Total Assets was $8,214 Mil.
Property, Plant and Equipment(Net PPE) was $116 Mil.
Depreciation, Depletion and Amortization(DDA) was $174 Mil.
Selling, General & Admin. Expense(SGA) was $977 Mil.
Total Current Liabilities was $1,127 Mil.
Long-Term Debt was $2,245 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)|
|=||(625.166 / 3436.21)||/||(631.891 / 3078.696)|
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)|
|=||(488.936 / 3078.696)||/||(523.182 / 3436.21)|
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 - (1524.525 + 116.394) / 8262.146)||/||(1 - (1328.135 + 115.677) / 8213.742)|
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))|
|=||(174.045 / (174.045 + 115.677))||/||(196.238 / (196.238 + 116.394))|
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)|
|=||(1080.459 / 3436.21)||/||(976.577 / 3078.696)|
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)|
|=||((2233.809 + 635.272) / 8262.146)||/||((2245.424 + 1126.851) / 8213.742)|
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|
|=||(606.613 - 0.254||-||844.676)||/||8262.146|
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 -2.60 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