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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 * 1.03||+||0.528 * 0.999||+||0.404 * 0.9564||+||0.892 * 1.0664||+||0.115 * 0.8734|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0022||+||4.679 * -0.0892||-||0.327 * 0.9607|
|This Year (Jul16) TTM:||Last Year (Jul15) TTM:|
|Accounts Receivable was $97 Mil.|
Revenue was 3180.917 + 3088.995 + 3250.726 + 2782.855 = $12,303 Mil.
Gross Profit was 929.072 + 912.79 + 864.135 + 779.508 = $3,486 Mil.
Total Current Assets was $2,714 Mil.
Total Assets was $5,194 Mil.
Property, Plant and Equipment(Net PPE) was $2,310 Mil.
Depreciation, Depletion and Amortization(DDA) was $295 Mil.
Selling, General & Admin. Expense(SGA) was $1,801 Mil.
Total Current Liabilities was $1,751 Mil.
Long-Term Debt was $396 Mil.
Net Income was 281.906 + 290.634 + 264.161 + 215.656 = $1,052 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 310.474 + 469.08 + 564.225 + 171.656 = $1,515 Mil.
|Accounts Receivable was $88 Mil.
Revenue was 2968.27 + 2938.148 + 3032.698 + 2598.82 = $11,538 Mil.
Gross Profit was 848.79 + 870.693 + 829.129 + 716.635 = $3,265 Mil.
Total Current Assets was $2,359 Mil.
Total Assets was $4,814 Mil.
Property, Plant and Equipment(Net PPE) was $2,289 Mil.
Depreciation, Depletion and Amortization(DDA) was $251 Mil.
Selling, General & Admin. Expense(SGA) was $1,685 Mil.
Total Current Liabilities was $1,676 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)|
|=||(97.139 / 12303.493)||/||(88.443 / 11537.936)|
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)|
|=||(3265.247 / 11537.936)||/||(3485.505 / 12303.493)|
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 - (2713.68 + 2310.481) / 5194.234)||/||(1 - (2359.301 + 2289.478) / 4813.572)|
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))|
|=||(251.018 / (251.018 + 2289.478))||/||(294.729 / (294.729 + 2310.481))|
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)|
|=||(1800.666 / 12303.493)||/||(1684.868 / 11537.936)|
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)|
|=||((396.259 + 1751.181) / 5194.234)||/||((395.793 + 1675.657) / 4813.572)|
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|
|=||(1052.357 - 0||-||1515.435)||/||5194.234|
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 -2.83 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