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Beneish M-Score -0.80 higher than -2.22, which implies that it might have manipulated its financial results.
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 -0.80 signals that the company is a manipulator.
During the past 5 years, the highest Beneish M-Score of Rose Rock Midstream LP was 22.03. The lowest was -1.48. And the median was 4.88.
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 * 1.7363||+||0.528 * 1.2972||+||0.404 * 2.2255||+||0.892 * 1.6483||+||0.115 * 0.4864|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.7759||+||4.679 * -0.0253||-||0.327 * 1.2854|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $637.9 Mil.|
Revenue was 290.432 + 290.923 + 252.041 + 181.831 = $1,015.2 Mil.
Gross Profit was 17.681 + 21.508 + 19.467 + 15.033 = $73.7 Mil.
Total Current Assets was $672.4 Mil.
Total Assets was $1,348.5 Mil.
Property, Plant and Equipment(Net PPE) was $336.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $32.8 Mil.
Selling, General & Admin. Expense(SGA) was $18.1 Mil.
Total Current Liabilities was $247.7 Mil.
Long-Term Debt was $847.6 Mil.
Net Income was 11.048 + 12.483 + 6.21 + 9.411 = $39.2 Mil.
Non Operating Income was 0.021 + 0 + 0.002 + 0 = $0.0 Mil.
Cash Flow from Operations was 5.669 + 18.388 + 50.36 + -1.194 = $73.2 Mil.
|Accounts Receivable was $222.9 Mil.
Revenue was 161.422 + 171.232 + 151.73 + 131.554 = $615.9 Mil.
Gross Profit was 15.109 + 17.363 + 11.455 + 14.066 = $58.0 Mil.
Total Current Assets was $250.8 Mil.
Total Assets was $616.8 Mil.
Property, Plant and Equipment(Net PPE) was $296.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $13.4 Mil.
Selling, General & Admin. Expense(SGA) was $14.1 Mil.
Total Current Liabilities was $223.2 Mil.
Long-Term Debt was $166.5 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)|
|=||(637.865 / 1015.227)||/||(222.878 / 615.938)|
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)|
|=||(21.508 / 615.938)||/||(17.681 / 1015.227)|
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 - (672.365 + 336.377) / 1348.537)||/||(1 - (250.845 + 296.084) / 616.758)|
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))|
|=||(13.362 / (13.362 + 296.084))||/||(32.769 / (32.769 + 336.377))|
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)|
|=||(18.096 / 1015.227)||/||(14.149 / 615.938)|
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)|
|=||((847.568 + 247.677) / 1348.537)||/||((166.549 + 223.158) / 616.758)|
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|
|=||(39.152 - 0.023||-||73.223)||/||1348.537|
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 -0.80 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