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Rouse Properties Inc (NYSE:RSE)
Beneish M-Score
-2.98 (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.

Rouse Properties Inc has a M-score of -2.98 suggests that the company is not a manipulator.

RSE' s Beneish M-Score Range Over the Past 10 Years
Min: -3.46   Max: -2.77
Current: -2.98

-3.46
-2.77

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.


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 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
=-2.98

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

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

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)
=(36.979 / 302.237) / (31.217 / 277.764)
=0.122351 / 0.11238677
=1.0887

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)
=(46.128 / 277.764) / (48.458 / 302.237)
=0.6270647 / 0.64589709
=0.9708

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 - (188.506 + 2121.099) / 2309.605) / (1 - (166.606 + 2047.987) / 2266.022)
=0 / 0.02269572
=0

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
=302.237 / 277.764
=1.0881

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))
=0.04409423 / 0.05122901
=0.8607

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)
=0.1004609 / 0.10175905
=0.9872

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)
=0.76250484 / 0.755009
=1.0099

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
=(29.82 - 59.322 - 81.554) / 2309.605
=-0.0481

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.


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.

Rouse Properties Inc Annual Data

Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.5485
GMI 1.0182
AQI 0
SGI 0.9552
DEPI 1.1864
SGAI 1.6497
LVGI 0.9856
TATA -0.0561
M-score -2.76

Rouse Properties Inc Quarterly Data

Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15
DSRI 1.07641.0887
GMI 1.10540.9708
AQI 0.16510
SGI 1.17691.0881
DEPI 1.22320.8607
SGAI 0.97990.9872
LVGI 1.04371.0099
TATA -0.063-0.0481
M-score -2.81-2.98
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