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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 -3.03. And the median was -2.71.
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 * 1.0031||+||0.528 * 1.0222||+||0.404 * 0.9958||+||0.892 * 1.0299||+||0.115 * 0.9875|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9589||+||4.679 * -0.0501||-||0.327 * 1.0064|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $995 Mil.|
Revenue was 2379.2 + 2409.3 + 2350.7 + 2248.6 = $9,388 Mil.
Gross Profit was 913.9 + 932.6 + 910 + 867.2 = $3,624 Mil.
Total Current Assets was $1,285 Mil.
Total Assets was $20,630 Mil.
Property, Plant and Equipment(Net PPE) was $7,589 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,070 Mil.
Selling, General & Admin. Expense(SGA) was $975 Mil.
Total Current Liabilities was $1,812 Mil.
Long-Term Debt was $7,653 Mil.
Net Income was 189.5 + 85.6 + 180.8 + 156.7 = $613 Mil.
Non Operating Income was -7.2 + -194.9 + 1.6 + -0.7 = $-201 Mil.
Cash Flow from Operations was 488.2 + 515.3 + 412.8 + 431.5 = $1,848 Mil.
|Accounts Receivable was $963 Mil.
Revenue was 2290.2 + 2344 + 2311.4 + 2169.4 = $9,115 Mil.
Gross Profit was 886.5 + 953.8 + 891 + 865.1 = $3,596 Mil.
Total Current Assets was $1,230 Mil.
Total Assets was $20,536 Mil.
Property, Plant and Equipment(Net PPE) was $7,553 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,050 Mil.
Selling, General & Admin. Expense(SGA) was $988 Mil.
Total Current Liabilities was $1,835 Mil.
Long-Term Debt was $7,527 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)|
|=||(994.8 / 9387.8)||/||(962.9 / 9115)|
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)|
|=||(3596.4 / 9115)||/||(3623.7 / 9387.8)|
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 - (1284.5 + 7588.6) / 20629.6)||/||(1 - (1230.3 + 7552.8) / 20535.9)|
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))|
|=||(1050 / (1050 + 7552.8))||/||(1070.2 / (1070.2 + 7588.6))|
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)|
|=||(975.4 / 9387.8)||/||(987.6 / 9115)|
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)|
|=||((7653.1 + 1812) / 20629.6)||/||((7527.4 + 1834.8) / 20535.9)|
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|
|=||(612.6 - -201.2||-||1847.8)||/||20629.6|
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