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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 6 years, the highest Beneish M-Score of Rouse Properties Inc was -2.77. The lowest was -3.46. And the median was -2.90.
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 Rouse Properties 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 * 1.0887||+||0.528 * 0.9708||+||0.404 * 0||+||0.892 * 1.0881||+||0.115 * 0.8607|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9872||+||4.679 * -0.0481||-||0.327 * 1.0099|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $37.0 Mil.|
Revenue was 73.553 + 72.409 + 74.561 + 81.714 = $302.2 Mil.
Gross Profit was 48.458 + 46.128 + 46.827 + 53.801 = $195.2 Mil.
Total Current Assets was $188.5 Mil.
Total Assets was $2,309.6 Mil.
Property, Plant and Equipment(Net PPE) was $2,121.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $114.5 Mil.
Selling, General & Admin. Expense(SGA) was $30.4 Mil.
Total Current Liabilities was $1,761.1 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -1.302 + -0.688 + 44.401 + -12.591 = $29.8 Mil.
Non Operating Income was -0.067 + 4.04 + 55.349 + 0 = $59.3 Mil.
Cash Flow from Operations was 20.743 + 22.99 + 18.487 + 19.334 = $81.6 Mil.
|Accounts Receivable was $31.2 Mil.
Revenue was 74.783 + 67.79 + 67.839 + 67.352 = $277.8 Mil.
Gross Profit was 46.463 + 41.958 + 41.734 + 44.021 = $174.2 Mil.
Total Current Assets was $166.6 Mil.
Total Assets was $2,266.0 Mil.
Property, Plant and Equipment(Net PPE) was $2,048.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $94.5 Mil.
Selling, General & Admin. Expense(SGA) was $28.3 Mil.
Total Current Liabilities was $1,710.9 Mil.
Long-Term Debt was $0.0 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)|
|=||(36.979 / 302.237)||/||(31.217 / 277.764)|
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)|
|=||(46.128 / 277.764)||/||(48.458 / 302.237)|
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 - (188.506 + 2121.099) / 2309.605)||/||(1 - (166.606 + 2047.987) / 2266.022)|
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))|
|=||(94.47 / (94.47 + 2047.987))||/||(114.529 / (114.529 + 2121.099))|
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)|
|=||(30.363 / 302.237)||/||(28.265 / 277.764)|
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)|
|=||((0 + 1761.085) / 2309.605)||/||((0 + 1710.867) / 2266.022)|
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|
|=||(29.82 - 59.322||-||81.554)||/||2309.605|
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.
Rouse Properties Inc has a M-score of -2.98 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
Rouse Properties Inc Annual Data
Rouse Properties Inc Quarterly Data