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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 -4.31. And the median was -2.82.
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|
|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
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)|
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)|
|=||(176.978 / 644.812)||/||(195.439 / 695.977)|
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 - (240.893 + 91.5) / 394.529)||/||(1 - (231.909 + 85.264) / 364.252)|
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))|
|=||(18.964 / (18.964 + 85.264))||/||(19.998 / (19.998 + 91.5))|
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)|
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)|
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|
|=||(77.461 - 1.38||-||65.277)||/||394.529|
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.
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