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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 -4.98. And the median was -2.76.
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 * 1.0524||+||0.528 * 0.9762||+||0.404 * 0.9985||+||0.892 * 1.032||+||0.115 * 0.9192|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9024||+||4.679 * -0.0938||-||0.327 * 0.8866|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $122.3 Mil.|
Revenue was 173.846 + 186.903 + 162.616 + 154.641 = $678.0 Mil.
Gross Profit was 49.748 + 52.751 + 45.161 + 42.239 = $189.9 Mil.
Total Current Assets was $269.7 Mil.
Total Assets was $413.6 Mil.
Property, Plant and Equipment(Net PPE) was $90.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $18.8 Mil.
Selling, General & Admin. Expense(SGA) was $107.7 Mil.
Total Current Liabilities was $126.5 Mil.
Long-Term Debt was $95.3 Mil.
Net Income was 10.284 + 11.571 + 7.239 + 6.084 = $35.2 Mil.
Non Operating Income was 0.804 + 0.559 + -0.038 + -2.055 = $-0.7 Mil.
Cash Flow from Operations was 19.223 + 16.662 + 1.132 + 37.672 = $74.7 Mil.
|Accounts Receivable was $112.6 Mil.
Revenue was 162.057 + 165.289 + 162.825 + 166.811 = $657.0 Mil.
Gross Profit was 45.145 + 45.946 + 43.648 + 44.901 = $179.6 Mil.
Total Current Assets was $235.5 Mil.
Total Assets was $365.9 Mil.
Property, Plant and Equipment(Net PPE) was $83.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $15.6 Mil.
Selling, General & Admin. Expense(SGA) was $115.6 Mil.
Total Current Liabilities was $116.3 Mil.
Long-Term Debt was $105.0 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)|
|=||(122.286 / 678.006)||/||(112.595 / 656.982)|
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)|
|=||(179.64 / 656.982)||/||(189.899 / 678.006)|
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 - (269.723 + 90.746) / 413.602)||/||(1 - (235.538 + 83.258) / 365.866)|
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))|
|=||(15.625 / (15.625 + 83.258))||/||(18.838 / (18.838 + 90.746))|
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)|
|=||(107.652 / 678.006)||/||(115.598 / 656.982)|
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)|
|=||((95.264 + 126.529) / 413.602)||/||((104.982 + 116.297) / 365.866)|
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|
|=||(35.178 - -0.73||-||74.689)||/||413.602|
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 -2.81 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