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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 Stoneridge Inc was -1.70. The lowest was -5.18. 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 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 * 0.7546||+||0.528 * 1.0883||+||0.404 * 0.6632||+||0.892 * 1.0002||+||0.115 * 0.9437|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0134||+||4.679 * -0.1847||-||0.327 * 1.0391|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $113.7 Mil.|
Revenue was 162.825 + 166.811 + 170.338 + 162.099 = $662.1 Mil.
Gross Profit was 43.648 + 44.901 + 49.55 + 48.285 = $186.4 Mil.
Total Current Assets was $236.4 Mil.
Total Assets was $377.3 Mil.
Property, Plant and Equipment(Net PPE) was $83.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $28.1 Mil.
Selling, General & Admin. Expense(SGA) was $112.7 Mil.
Total Current Liabilities was $120.1 Mil.
Long-Term Debt was $107.5 Mil.
Net Income was 2.344 + -26.554 + -0.13 + -21.892 = $-46.2 Mil.
Non Operating Income was 0.402 + -7.756 + -0.738 + -0.186 = $-8.3 Mil.
Cash Flow from Operations was -4.279 + 20.661 + 6.213 + 9.132 = $31.7 Mil.
|Accounts Receivable was $150.6 Mil.
Revenue was 161.331 + 169.235 + 161.556 + 169.833 = $662.0 Mil.
Gross Profit was 48.138 + 50.643 + 49.729 + 54.303 = $202.8 Mil.
Total Current Assets was $362.4 Mil.
Total Assets was $613.0 Mil.
Property, Plant and Equipment(Net PPE) was $109.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $34.2 Mil.
Selling, General & Admin. Expense(SGA) was $111.2 Mil.
Total Current Liabilities was $171.7 Mil.
Long-Term Debt was $184.1 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)|
|=||(113.655 / 662.073)||/||(150.599 / 661.955)|
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)|
|=||(44.901 / 661.955)||/||(43.648 / 662.073)|
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 - (236.368 + 83.405) / 377.321)||/||(1 - (362.398 + 109.602) / 612.956)|
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))|
|=||(34.221 / (34.221 + 109.602))||/||(28.118 / (28.118 + 83.405))|
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)|
|=||(112.668 / 662.073)||/||(111.158 / 661.955)|
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)|
|=||((107.471 + 120.103) / 377.321)||/||((184.077 + 171.709) / 612.956)|
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|
|=||(-46.232 - -8.278||-||31.727)||/||377.321|
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 -3.68 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
Stoneridge Inc Annual Data
Stoneridge Inc Quarterly Data