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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 Ross Stores Inc was -2.07. The lowest was -3.33. And the median was -2.65.
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 Ross Stores 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 * 1.0445||+||0.528 * 0.998||+||0.404 * 0.9298||+||0.892 * 1.0755||+||0.115 * 0.9044|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9997||+||4.679 * -0.0957||-||0.327 * 0.976|
|This Year (Oct16) TTM:||Last Year (Oct15) TTM:|
|Accounts Receivable was $91 Mil.|
Revenue was 3086.687 + 3180.917 + 3088.995 + 3250.726 = $12,607 Mil.
Gross Profit was 880.595 + 929.072 + 912.79 + 864.135 = $3,587 Mil.
Total Current Assets was $2,875 Mil.
Total Assets was $5,350 Mil.
Property, Plant and Equipment(Net PPE) was $2,311 Mil.
Depreciation, Depletion and Amortization(DDA) was $297 Mil.
Selling, General & Admin. Expense(SGA) was $1,847 Mil.
Total Current Liabilities was $1,888 Mil.
Long-Term Debt was $396 Mil.
Net Income was 244.546 + 281.906 + 290.634 + 264.161 = $1,081 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 249.674 + 310.474 + 469.08 + 564.225 = $1,593 Mil.
|Accounts Receivable was $81 Mil.
Revenue was 2782.855 + 2968.27 + 2938.148 + 3032.698 = $11,722 Mil.
Gross Profit was 779.508 + 848.79 + 870.693 + 829.129 = $3,328 Mil.
Total Current Assets was $2,435 Mil.
Total Assets was $4,904 Mil.
Property, Plant and Equipment(Net PPE) was $2,308 Mil.
Depreciation, Depletion and Amortization(DDA) was $265 Mil.
Selling, General & Admin. Expense(SGA) was $1,718 Mil.
Total Current Liabilities was $1,749 Mil.
Long-Term Debt was $396 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)|
|=||(91.355 / 12607.325)||/||(81.324 / 11721.971)|
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)|
|=||(3328.12 / 11721.971)||/||(3586.592 / 12607.325)|
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 - (2875.376 + 2310.67) / 5349.887)||/||(1 - (2434.59 + 2307.665) / 4903.771)|
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))|
|=||(264.812 / (264.812 + 2307.665))||/||(296.79 / (296.79 + 2310.67))|
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)|
|=||(1847.483 / 12607.325)||/||(1718.22 / 11721.971)|
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)|
|=||((396.376 + 1887.944) / 5349.887)||/||((395.909 + 1749.479) / 4903.771)|
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|
|=||(1081.247 - 0||-||1593.453)||/||5349.887|
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.
Ross Stores Inc has a M-score of -2.85 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
Ross Stores Inc Annual Data
Ross Stores Inc Quarterly Data