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Ross Stores, Inc. (NAS:ROST)
Beneish M-Score
-2.59 (As of Today)

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.

ROST' s 10-Year Beneish M-Score Range
Min: -3.33   Max: -2.07
Current: -2.59

-3.33
-2.07

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.


Definition

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
=-2.62

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

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

Measured as the ratio of days’ sales in receivables in year t to year t-1.

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)
=0.00612022 / 0.00613276
=0.998

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(651.887 / 9721.065) / (748.939 / 10230.353)
=0.2787387 / 0.28048191
=0.9938

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

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)
=0.03960663 / 0.03973507
=0.9968

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=10230.353 / 9721.065
=1.0524

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))
=0.11049188 / 0.0990247
=1.1158

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)
=0.14919974 / 0.14791445
=1.0087

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)
=0.39598085 / 0.42843097
=0.9243

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(837.304 - 0 - 1022.003) / 3896.797
=-0.0474

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.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Ross Stores, Inc. Annual Data

Jan05Jan06Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14
DSRI 1.1390.80160.91761.16021.01220.970.93711.02381.03820.998
GMI 1.12841.006910.99030.9630.91240.95170.98750.98670.9938
AQI 1.05711.10161.11971.09480.86420.75680.98821.430.97080.9968
SGI 1.08151.16611.12661.07271.08551.10761.09491.09441.12931.0524
DEPI 0.94030.98441.16941.01910.95540.89861.02781.23081.03241.1158
SGAI 0.97771.01510.97411.01091.01810.9870.99320.9690.97641.0087
LVGI 0.96981.03661.15330.9360.95871.03190.99570.940.94540.9243
TATA -0.0646-0.092-0.1161-0.039-0.118-0.161-0.038-0.0494-0.0525-0.0474
M-score -2.48-2.92-2.96-2.40-3.01-3.33-2.66-2.39-2.57-2.62

Ross Stores, Inc. Quarterly Data

Oct11Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14
DSRI 1.06611.02380.97271.01550.98031.03821.04121.08910.97070.998
GMI 0.97790.98750.99690.99040.99140.98670.9850.98550.98450.9938
AQI 1.3791.431.37550.88430.93210.97080.96551.01290.99350.9968
SGI 1.08511.09441.11051.11711.121.12931.1141.10641.09531.0524
DEPI 1.1451.23081.19141.13281.09821.03241.041.08841.11441.1158
SGAI 0.98760.9690.96440.96750.96790.97640.98480.98820.99541.0087
LVGI 0.94530.940.98241.02160.99370.94540.95690.94390.94150.9243
TATA -0.0104-0.0494-0.1109-0.1225-0.0851-0.0525-0.0579-0.0419-0.0402-0.0474
M-score -2.21-2.39-2.74-2.97-2.80-2.57-2.61-2.47-2.59-2.62
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