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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 13 years, the highest Beneish M-Score of Republic Services Inc was -0.50. The lowest was -3.04. And the median was -2.74.
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 * 0.9979||+||0.528 * 1.041||+||0.404 * 0.9837||+||0.892 * 1.0414||+||0.115 * 1.0053|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9108||+||4.679 * -0.0538||-||0.327 * 1.0264|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $969 Mil.|
Revenue was 2311.4 + 2169.4 + 2225.2 + 2264.1 = $8,970 Mil.
Gross Profit was 891 + 865.1 + 688.7 + 866.8 = $3,312 Mil.
Total Current Assets was $1,341 Mil.
Total Assets was $20,667 Mil.
Property, Plant and Equipment(Net PPE) was $7,539 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,021 Mil.
Selling, General & Admin. Expense(SGA) was $961 Mil.
Total Current Liabilities was $1,788 Mil.
Long-Term Debt was $7,548 Mil.
Net Income was 190.3 + 172.4 + 50.3 + 185.8 = $599 Mil.
Non Operating Income was 0.9 + 0 + 0.5 + -0.1 = $1 Mil.
Cash Flow from Operations was 405.1 + 496.1 + 428.2 + 379.3 = $1,709 Mil.
|Accounts Receivable was $933 Mil.
Revenue was 2229.2 + 2077.2 + 2141.5 + 2165.4 = $8,613 Mil.
Gross Profit was 852.3 + 752.5 + 857.5 + 847.8 = $3,310 Mil.
Total Current Assets was $1,225 Mil.
Total Assets was $19,876 Mil.
Property, Plant and Equipment(Net PPE) was $7,127 Mil.
Depreciation, Depletion and Amortization(DDA) was $971 Mil.
Selling, General & Admin. Expense(SGA) was $1,013 Mil.
Total Current Liabilities was $1,706 Mil.
Long-Term Debt was $7,042 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)|
|=||(969.4 / 8970.1)||/||(932.8 / 8613.3)|
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)|
|=||(865.1 / 8613.3)||/||(891 / 8970.1)|
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 - (1340.9 + 7538.7) / 20666.6)||/||(1 - (1225.1 + 7126.9) / 19876)|
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))|
|=||(971.3 / (971.3 + 7126.9))||/||(1021.3 / (1021.3 + 7538.7))|
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)|
|=||(961 / 8970.1)||/||(1013.1 / 8613.3)|
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)|
|=||((7547.5 + 1788.2) / 20666.6)||/||((7042.1 + 1705.5) / 19876)|
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|
|=||(598.8 - 1.3||-||1708.7)||/||20666.6|
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 -2.67 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