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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 -4.50. 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 * 1.0126||+||0.528 * 0.8881||+||0.404 * 0.7304||+||0.892 * 0.7761||+||0.115 * 0.7951|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8931||+||4.679 * -0.1418||-||0.327 * 1.0059|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $105.1 Mil.|
Revenue was 166.811 + 170.338 + 162.099 + 236.389 = $735.6 Mil.
Gross Profit was 44.901 + 49.55 + 48.285 + 54.789 = $197.5 Mil.
Total Current Assets was $245.5 Mil.
Total Assets was $398.8 Mil.
Property, Plant and Equipment(Net PPE) was $85.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $30.1 Mil.
Selling, General & Admin. Expense(SGA) was $129.1 Mil.
Total Current Liabilities was $120.3 Mil.
Long-Term Debt was $110.7 Mil.
Net Income was -26.554 + -0.13 + -21.892 + 1.468 = $-47.1 Mil.
Non Operating Income was -7.756 + -0.738 + -0.186 + -1.708 = $-10.4 Mil.
Cash Flow from Operations was 20.661 + 6.213 + 9.132 + -16.191 = $19.8 Mil.
|Accounts Receivable was $133.7 Mil.
Revenue was 235.824 + 233.511 + 242.785 + 235.71 = $947.8 Mil.
Gross Profit was 53.553 + 53.519 + 60.22 + 58.729 = $226.0 Mil.
Total Current Assets was $340.2 Mil.
Total Assets was $588.3 Mil.
Property, Plant and Equipment(Net PPE) was $110.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $29.0 Mil.
Selling, General & Admin. Expense(SGA) was $186.3 Mil.
Total Current Liabilities was $153.7 Mil.
Long-Term Debt was $185.0 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)|
|=||(105.102 / 735.637)||/||(133.736 / 947.83)|
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)|
|=||(49.55 / 947.83)||/||(44.901 / 735.637)|
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 - (245.511 + 85.311) / 398.751)||/||(1 - (340.236 + 110.872) / 588.322)|
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))|
|=||(28.989 / (28.989 + 110.872))||/||(30.081 / (30.081 + 85.311))|
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)|
|=||(129.147 / 735.637)||/||(186.317 / 947.83)|
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)|
|=||((110.651 + 120.314) / 398.751)||/||((185.045 + 153.722) / 588.322)|
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|
|=||(-47.108 - -10.388||-||19.815)||/||398.751|
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 -3.51 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