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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.
Rose Rock Midstream LP has a M-score of -1.94 signals that the company is a manipulator.
During the past 5 years, the highest Beneish M-Score of Rose Rock Midstream LP was 21.84. The lowest was -1.94. And the median was 4.51.
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 Rose Rock Midstream LP 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 * 0.6225||+||0.528 * 1.3653||+||0.404 * 2.0177||+||0.892 * 1.8137||+||0.115 * 0.4506|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.802||+||4.679 * -0.0455||-||0.327 * 1.6224|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $291.2 Mil.|
Revenue was 374.945 + 290.432 + 290.923 + 252.041 = $1,208.3 Mil.
Gross Profit was 19.667 + 17.681 + 21.508 + 19.467 = $78.3 Mil.
Total Current Assets was $389.7 Mil.
Total Assets was $1,065.3 Mil.
Property, Plant and Equipment(Net PPE) was $332.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $36.1 Mil.
Selling, General & Admin. Expense(SGA) was $19.2 Mil.
Total Current Liabilities was $338.9 Mil.
Long-Term Debt was $473.1 Mil.
Net Income was 16.493 + 11.048 + 12.483 + 6.21 = $46.2 Mil.
Non Operating Income was 0 + 0.021 + 0 + 0.002 = $0.0 Mil.
Cash Flow from Operations was 20.301 + 5.669 + 18.388 + 50.36 = $94.7 Mil.
|Accounts Receivable was $257.9 Mil.
Revenue was 181.831 + 161.422 + 171.232 + 151.73 = $666.2 Mil.
Gross Profit was 15.033 + 15.109 + 17.363 + 11.455 = $59.0 Mil.
Total Current Assets was $294.3 Mil.
Total Assets was $722.7 Mil.
Property, Plant and Equipment(Net PPE) was $313.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $14.4 Mil.
Selling, General & Admin. Expense(SGA) was $13.2 Mil.
Total Current Liabilities was $254.5 Mil.
Long-Term Debt was $85.0 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)|
|=||(291.177 / 1208.341)||/||(257.901 / 666.215)|
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)|
|=||(17.681 / 666.215)||/||(19.667 / 1208.341)|
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 - (389.654 + 332.902) / 1065.311)||/||(1 - (294.3 + 313.193) / 722.739)|
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))|
|=||(14.426 / (14.426 + 313.193))||/||(36.057 / (36.057 + 332.902))|
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)|
|=||(19.221 / 1208.341)||/||(13.214 / 666.215)|
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)|
|=||((473.058 + 338.923) / 1065.311)||/||((85.043 + 254.491) / 722.739)|
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|
|=||(46.234 - 0.023||-||94.718)||/||1065.311|
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.
Rose Rock Midstream LP has a M-score of -1.94 signals that the company is likely to 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
Rose Rock Midstream LP Annual Data
Rose Rock Midstream LP Quarterly Data