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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.
Republic Services Inc has a M-score of -2.66 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Republic Services Inc was -0.56. The lowest was -3.04. And the median was -2.70.
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 Republic Services 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 * 1.0043||+||0.528 * 1.014||+||0.404 * 0.9846||+||0.892 * 1.0368||+||0.115 * 0.9906|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0031||+||4.679 * -0.0481||-||0.327 * 0.9804|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $984 Mil.|
Revenue was 2141.5 + 2165.4 + 2111.7 + 1998.6 = $8,417 Mil.
Gross Profit was 857.5 + 847.8 + 701.7 + 775.5 = $3,183 Mil.
Total Current Assets was $1,422 Mil.
Total Assets was $19,949 Mil.
Property, Plant and Equipment(Net PPE) was $7,037 Mil.
Depreciation, Depletion and Amortization(DDA) was $954 Mil.
Selling, General & Admin. Expense(SGA) was $854 Mil.
Total Current Liabilities was $1,717 Mil.
Long-Term Debt was $7,002 Mil.
Net Income was 236.6 + 171.4 + 56.3 + 124.6 = $589 Mil.
Non Operating Income was 0.8 + 1 + 0 + -1.6 = $0 Mil.
Cash Flow from Operations was 411 + 375.7 + 341.7 + 419.8 = $1,548 Mil.
|Accounts Receivable was $945 Mil.
Revenue was 2028.4 + 2046.9 + 2060.6 + 1982.4 = $8,118 Mil.
Gross Profit was 744.9 + 766.4 + 822.1 + 779.2 = $3,113 Mil.
Total Current Assets was $1,231 Mil.
Total Assets was $19,617 Mil.
Property, Plant and Equipment(Net PPE) was $6,910 Mil.
Depreciation, Depletion and Amortization(DDA) was $927 Mil.
Selling, General & Admin. Expense(SGA) was $821 Mil.
Total Current Liabilities was $1,695 Mil.
Long-Term Debt was $7,051 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)|
|=||(984.2 / 8417.2)||/||(945.2 / 8118.3)|
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)|
|=||(847.8 / 8118.3)||/||(857.5 / 8417.2)|
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 - (1421.9 + 7036.8) / 19949.2)||/||(1 - (1231.3 + 6910.3) / 19616.9)|
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))|
|=||(926.9 / (926.9 + 6910.3))||/||(954 / (954 + 7036.8))|
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)|
|=||(853.8 / 8417.2)||/||(820.9 / 8118.3)|
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)|
|=||((7002.4 + 1717.1) / 19949.2)||/||((7051.1 + 1695) / 19616.9)|
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|
|=||(588.9 - 0.2||-||1548.2)||/||19949.2|
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.
Republic Services Inc has a M-score of -2.66 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
Republic Services Inc Annual Data
Republic Services Inc Quarterly Data