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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 -2.62 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 -2.60.
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 * 0.998||+||0.528 * 0.9938||+||0.404 * 0.9968||+||0.892 * 1.0524||+||0.115 * 1.1158|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0087||+||4.679 * -0.0474||-||0.327 * 0.9243|
|This Year (Jan14) TTM:||Last Year (Jan13) TTM:|
|Accounts Receivable was $63 Mil.|
Revenue was 2741.04 + 2398.122 + 2551.277 + 2539.914 = $10,230 Mil.
Gross Profit was 748.939 + 651.887 + 727.5 + 741.103 = $2,869 Mil.
Total Current Assets was $1,867 Mil.
Total Assets was $3,897 Mil.
Property, Plant and Equipment(Net PPE) was $1,875 Mil.
Depreciation, Depletion and Amortization(DDA) was $206 Mil.
Selling, General & Admin. Expense(SGA) was $1,526 Mil.
Total Current Liabilities was $1,393 Mil.
Long-Term Debt was $150 Mil.
Net Income was 217.953 + 171.618 + 213.121 + 234.612 = $837 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 340.782 + 148.893 + 179.469 + 352.859 = $1,022 Mil.
|Accounts Receivable was $60 Mil.
Revenue was 2760.646 + 2262.723 + 2340.855 + 2356.841 = $9,721 Mil.
Gross Profit was 766.985 + 613.726 + 651.212 + 677.714 = $2,710 Mil.
Total Current Assets was $2,031 Mil.
Total Assets was $3,671 Mil.
Property, Plant and Equipment(Net PPE) was $1,493 Mil.
Depreciation, Depletion and Amortization(DDA) was $185 Mil.
Selling, General & Admin. Expense(SGA) was $1,438 Mil.
Total Current Liabilities was $1,423 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)|
|=||(62.612 / 10230.353)||/||(59.617 / 9721.065)|
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)|
|=||(651.887 / 9721.065)||/||(748.939 / 10230.353)|
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 - (1867.159 + 1875.299) / 3896.797)||/||(1 - (2031.427 + 1493.284) / 3670.561)|
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))|
|=||(185.491 / (185.491 + 1493.284))||/||(206.111 / (206.111 + 1875.299))|
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)|
|=||(1526.366 / 10230.353)||/||(1437.886 / 9721.065)|
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 + 1393.057) / 3896.797)||/||((150 + 1422.582) / 3670.561)|
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|
|=||(837.304 - 0||-||1022.003)||/||3896.797|
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 -2.62 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