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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 7 years, the highest Beneish M-Score of Rouse Properties Inc was -2.77. The lowest was -3.46. And the median was -2.92.
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 *||+||0.528 *||+||0.404 *||+||0.892 *||+||0.115 *|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 *||+||4.679 *||-||0.327 *|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $43.4 Mil.|
Revenue was 80.632 + 84.861 + 73.553 + 72.409 = $311.5 Mil.
Gross Profit was 53.742 + 57.902 + 48.458 + 46.128 = $206.2 Mil.
Total Current Assets was $128.7 Mil.
Total Assets was $2,523.6 Mil.
Property, Plant and Equipment(Net PPE) was $2,350.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $108.3 Mil.
Selling, General & Admin. Expense(SGA) was $28.4 Mil.
Total Current Liabilities was $1,863.9 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -10.082 + -0.719 + -1.302 + -0.688 = $-12.8 Mil.
Non Operating Income was 0 + 2.031 + -0.067 + 4.04 = $6.0 Mil.
Cash Flow from Operations was 14.645 + 14.963 + 20.743 + 22.99 = $73.3 Mil.
|Accounts Receivable was $34.5 Mil.
Revenue was 74.561 + 81.714 + 74.783 + 67.79 = $298.8 Mil.
Gross Profit was 46.827 + 53.801 + 46.463 + 41.958 = $189.0 Mil.
Total Current Assets was $203.4 Mil.
Total Assets was $2,227.4 Mil.
Property, Plant and Equipment(Net PPE) was $2,023.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $114.6 Mil.
Selling, General & Admin. Expense(SGA) was $30.0 Mil.
Total Current Liabilities was $1,659.0 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)|
|=||(43.434 / 311.455)||/||(34.471 / 298.848)|
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)|
|=||(189.049 / 298.848)||/||(206.23 / 311.455)|
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 - (128.677 + 2350.34) / 2523.557)||/||(1 - (203.441 + 2023.911) / 2227.352)|
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))|
|=||(114.555 / (114.555 + 2023.911))||/||(108.303 / (108.303 + 2350.34))|
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)|
|=||(28.365 / 311.455)||/||(29.964 / 298.848)|
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 + 1863.918) / 2523.557)||/||((0 + 1658.969) / 2227.352)|
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|
|=||(-12.791 - 6.004||-||73.341)||/||2523.557|
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 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
Rouse Properties Inc Annual Data
Rouse Properties Inc Quarterly Data