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GuruFocus has detected 3 Warning Signs with Stoneridge Inc $SRI.
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Stoneridge Inc (NYSE:SRI)
Beneish M-Score
-2.03 (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.

Stoneridge Inc has a M-score of -2.03 signals that the company is a manipulator.

SRI' s Beneish M-Score Range Over the Past 10 Years
Min: -4.31   Max: -1.7
Current: -2.03

-4.31
-1.7

During the past 13 years, the highest Beneish M-Score of Stoneridge Inc was -1.70. The lowest was -4.31. And the median was -2.82.


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 Stoneridge 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 * 1.105+0.528 * 0.9774+0.404 * 1.2185+0.892 * 1.0793+0.115 * 1.0144
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.933+4.679 * 0.0274-0.327 * 0.8158
=-2.03

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $113.2 Mil.
Revenue was 172.612 + 173.846 + 186.903 + 162.616 = $696.0 Mil.
Gross Profit was 47.779 + 49.748 + 52.751 + 45.161 = $195.4 Mil.
Total Current Assets was $240.9 Mil.
Total Assets was $394.5 Mil.
Property, Plant and Equipment(Net PPE) was $91.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $20.0 Mil.
Selling, General & Admin. Expense(SGA) was $111.1 Mil.
Total Current Liabilities was $112.7 Mil.
Long-Term Debt was $75.1 Mil.
Net Income was 48.367 + 10.284 + 11.571 + 7.239 = $77.5 Mil.
Non Operating Income was 0.055 + 0.804 + 0.559 + -0.038 = $1.4 Mil.
Cash Flow from Operations was 28.26 + 19.223 + 16.662 + 1.132 = $65.3 Mil.
Accounts Receivable was $94.9 Mil.
Revenue was 154.641 + 162.057 + 165.289 + 162.825 = $644.8 Mil.
Gross Profit was 42.239 + 45.145 + 45.946 + 43.648 = $177.0 Mil.
Total Current Assets was $231.9 Mil.
Total Assets was $364.3 Mil.
Property, Plant and Equipment(Net PPE) was $85.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $19.0 Mil.
Selling, General & Admin. Expense(SGA) was $110.4 Mil.
Total Current Liabilities was $108.1 Mil.
Long-Term Debt was $104.5 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)
=(113.225 / 695.977) / (94.937 / 644.812)
=0.16268497 / 0.14723206
=1.105

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)
=(176.978 / 644.812) / (195.439 / 695.977)
=0.2744645 / 0.28081244
=0.9774

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 - (240.893 + 91.5) / 394.529) / (1 - (231.909 + 85.264) / 364.252)
=0.15749413 / 0.12924843
=1.2185

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
=695.977 / 644.812
=1.0793

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))
=(18.964 / (18.964 + 85.264)) / (19.998 / (19.998 + 91.5))
=0.18194727 / 0.17935748
=1.0144

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)
=(111.145 / 695.977) / (110.371 / 644.812)
=0.15969637 / 0.17116772
=0.933

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)
=((75.06 + 112.709) / 394.529) / ((104.458 + 108.05) / 364.252)
=0.47593206 / 0.58340929
=0.8158

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
=(77.461 - 1.38 - 65.277) / 394.529
=0.0274

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.

Stoneridge Inc has a M-score of -2.03 signals that the company is likely to 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 local exchange's currency.

Stoneridge Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.11410.76261.33370.94431.31331.08920.67241.02420.92541.105
GMI 0.97211.04411.19310.80811.19490.6340.96861.08081.05280.9774
AQI 0.95420.41451.43351.04261.65961.05290.82090.7570.75871.2185
SGI 1.0261.03520.63131.33691.20490.80021.07681.00170.97611.0793
DEPI 0.79691.01871.16391.02911.52120.57320.90961.13141.22131.0144
SGAI 1.04640.98251.23740.85930.87261.23130.90491.0020.91460.933
LVGI 0.94621.20841.03410.97620.86780.88951.01941.00591.00720.8158
TATA -0.0512-0.2926-0.1457-0.0328-0.0387-0.1119-0.0469-0.1419-0.08460.0274
M-score -2.64-4.31-2.94-2.43-1.70-3.32-3.02-3.16-3.00-2.03

Stoneridge Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.51881.14350.75461.09391.01470.92541.0181.09611.05241.105
GMI 1.29421.0031.08831.08731.08461.05281.01670.99470.97620.9774
AQI 0.85360.7570.66320.78990.62780.75870.83020.85720.99851.2185
SGI 1.42960.89711.00021.01690.99090.97610.97361.00141.0321.0793
DEPI 1.11631.13140.96041.24321.48691.22131.24711.12070.91921.0144
SGAI 0.63081.06971.11181.18211.23710.91460.87580.880.90240.933
LVGI 1.00121.00591.03910.99561.04521.00720.96470.94770.88660.8158
TATA -0.0728-0.1419-0.1847-0.097-0.1113-0.0846-0.0784-0.0893-0.09380.0274
M-score -2.71-3.20-3.70-2.87-3.10-3.00-2.85-2.82-2.81-2.03
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