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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 6 years, the highest Beneish M-Score of rue21 Inc was 0.00. The lowest was 0.00. And the median was 0.00.
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 rue21 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 * 0.8428||+||0.528 * 1.0082||+||0.404 * 1.2159||+||0.892 * 1.1527||+||0.115 * 0.9902|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0703||+||4.679 * -0.1024||-||0.327 * 0.9792|
|This Year (Jul13) TTM:||Last Year (Jul12) TTM:|
|Accounts Receivable was $11.0 Mil.|
Revenue was 229.322 + 224.375 + 269.054 + 225.158 = $947.9 Mil.
Gross Profit was 79.559 + 89.699 + 101.2 + 85.106 = $355.6 Mil.
Total Current Assets was $266.8 Mil.
Total Assets was $430.2 Mil.
Property, Plant and Equipment(Net PPE) was $158.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $35.8 Mil.
Selling, General & Admin. Expense(SGA) was $264.7 Mil.
Total Current Liabilities was $177.9 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 1.085 + 10.798 + 15.043 + 8.165 = $35.1 Mil.
Non Operating Income was -0.044 + 0 + 0 + 0 = $-0.0 Mil.
Cash Flow from Operations was 12.215 + 20.483 + 35.954 + 10.544 = $79.2 Mil.
|Accounts Receivable was $11.3 Mil.
Revenue was 202.059 + 205.615 + 219.896 + 194.761 = $822.3 Mil.
Gross Profit was 79.531 + 79.681 + 80.364 + 71.4 = $311.0 Mil.
Total Current Assets was $249.0 Mil.
Total Assets was $385.5 Mil.
Property, Plant and Equipment(Net PPE) was $133.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $29.7 Mil.
Selling, General & Admin. Expense(SGA) was $214.5 Mil.
Total Current Liabilities was $162.8 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)|
|=||(11 / 947.909)||/||(11.322 / 822.331)|
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)|
|=||(310.976 / 822.331)||/||(355.564 / 947.909)|
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 - (266.781 + 158.92) / 430.226)||/||(1 - (249.001 + 133.202) / 385.538)|
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))|
|=||(29.65 / (29.65 + 133.202))||/||(35.803 / (35.803 + 158.92))|
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)|
|=||(264.686 / 947.909)||/||(214.533 / 822.331)|
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 + 177.894) / 430.226)||/||((0 + 162.8) / 385.538)|
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|
|=||(35.091 - -0.044||-||79.196)||/||430.226|
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.
rue21 Inc has a M-score of -2.88 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
rue21 Inc Annual Data
rue21 Inc Quarterly Data