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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.
Ross Stores Inc has a M-score of -2.82 suggests that the company is not a 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 -2.62.
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 * 1.0316||+||0.528 * 1.0044||+||0.404 * 0.9442||+||0.892 * 1.043||+||0.115 * 1.0758|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0019||+||4.679 * -0.086||-||0.327 * 0.9726|
|This Year (Jul14) TTM:||Last Year (Jul13) TTM:|
|Accounts Receivable was $85 Mil.|
Revenue was 2729.566 + 2680.593 + 2741.04 + 2398.122 = $10,549 Mil.
Gross Profit was 785.549 + 772.409 + 748.939 + 651.887 = $2,959 Mil.
Total Current Assets was $2,024 Mil.
Total Assets was $4,168 Mil.
Property, Plant and Equipment(Net PPE) was $1,979 Mil.
Depreciation, Depletion and Amortization(DDA) was $218 Mil.
Selling, General & Admin. Expense(SGA) was $1,558 Mil.
Total Current Liabilities was $1,532 Mil.
Long-Term Debt was $150 Mil.
Net Income was 239.561 + 243.913 + 217.953 + 171.618 = $873 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 237.214 + 504.577 + 340.782 + 148.893 = $1,231 Mil.
|Accounts Receivable was $79 Mil.
Revenue was 2551.277 + 2539.914 + 2760.646 + 2262.723 = $10,115 Mil.
Gross Profit was 727.5 + 741.103 + 766.985 + 613.726 = $2,849 Mil.
Total Current Assets was $2,098 Mil.
Total Assets was $3,908 Mil.
Property, Plant and Equipment(Net PPE) was $1,646 Mil.
Depreciation, Depletion and Amortization(DDA) was $197 Mil.
Selling, General & Admin. Expense(SGA) was $1,491 Mil.
Total Current Liabilities was $1,472 Mil.
Long-Term Debt was $150 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)|
|=||(85.218 / 10549.321)||/||(79.202 / 10114.56)|
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)|
|=||(772.409 / 10114.56)||/||(785.549 / 10549.321)|
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 - (2023.865 + 1979.288) / 4167.832)||/||(1 - (2098.477 + 1646.457) / 3908.485)|
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))|
|=||(196.66 / (196.66 + 1646.457))||/||(217.928 / (217.928 + 1979.288))|
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)|
|=||(1558.232 / 10549.321)||/||(1491.147 / 10114.56)|
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)|
|=||((150 + 1532.121) / 4167.832)||/||((150 + 1471.814) / 3908.485)|
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|
|=||(873.045 - 0||-||1231.466)||/||4167.832|
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 -2.82 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