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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 * 0.899||+||0.528 * 0.982||+||0.404 * 0.9868||+||0.892 * 1.0962||+||0.115 * 0.9642|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9665||+||4.679 * -0.0232||-||0.327 * 0.8894|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $512 Mil.|
Revenue was 946.145 + 884.122 + 885.175 + 834.052 = $3,549 Mil.
Gross Profit was 565.741 + 524.04 + 523.182 + 488.936 = $2,102 Mil.
Total Current Assets was $1,512 Mil.
Total Assets was $8,413 Mil.
Property, Plant and Equipment(Net PPE) was $111 Mil.
Depreciation, Depletion and Amortization(DDA) was $197 Mil.
Selling, General & Admin. Expense(SGA) was $1,102 Mil.
Total Current Liabilities was $628 Mil.
Long-Term Debt was $2,203 Mil.
Net Income was 185.936 + 155.51 + 157.361 + 147.226 = $646 Mil.
Non Operating Income was -0.422 + 0.552 + -0.93 + 1.42 = $1 Mil.
Cash Flow from Operations was 261.209 + 226.102 + 140.502 + 212.628 = $840 Mil.
|Accounts Receivable was $519 Mil.
Revenue was 889.173 + 827.81 + 784.01 + 737.135 = $3,238 Mil.
Gross Profit was 533.22 + 482.625 + 445.507 + 421.576 = $1,883 Mil.
Total Current Assets was $1,373 Mil.
Total Assets was $8,185 Mil.
Property, Plant and Equipment(Net PPE) was $117 Mil.
Depreciation, Depletion and Amortization(DDA) was $189 Mil.
Selling, General & Admin. Expense(SGA) was $1,041 Mil.
Total Current Liabilities was $643 Mil.
Long-Term Debt was $2,454 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)|
|=||(511.538 / 3549.494)||/||(519.075 / 3238.128)|
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)|
|=||(524.04 / 3238.128)||/||(565.741 / 3549.494)|
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 - (1512.105 + 110.876) / 8412.934)||/||(1 - (1373.337 + 117.31) / 8184.981)|
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))|
|=||(189.19 / (189.19 + 117.31))||/||(197.284 / (197.284 + 110.876))|
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)|
|=||(1102.426 / 3549.494)||/||(1040.567 / 3238.128)|
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)|
|=||((2203.031 + 627.947) / 8412.934)||/||((2453.836 + 643.091) / 8184.981)|
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|
|=||(646.033 - 0.62||-||840.441)||/||8412.934|
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 -2.57 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