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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 T. Rowe Price Group Inc was -1.94. The lowest was -3.04. And the median was -2.49.
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 T. Rowe Price Group 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 * 1.0327||+||0.528 * 0.9457||+||0.404 * 1.0877||+||0.892 * 1.0031||+||0.115 * 0.9582|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1972||+||4.679 * 0.0717||-||0.327 * 1.0249|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $447 Mil.|
Revenue was 1092.9 + 1044.7 + 994.1 + 1052.2 = $4,184 Mil.
Gross Profit was 1010.9 + 968.3 + 918.8 + 974.2 = $3,872 Mil.
Total Current Assets was $1,848 Mil.
Total Assets was $6,724 Mil.
Property, Plant and Equipment(Net PPE) was $616 Mil.
Depreciation, Depletion and Amortization(DDA) was $132 Mil.
Selling, General & Admin. Expense(SGA) was $1,549 Mil.
Total Current Liabilities was $776 Mil.
Long-Term Debt was $0 Mil.
Net Income was 327.8 + 195.3 + 295.2 + 303.2 = $1,122 Mil.
Non Operating Income was 88.3 + 41.5 + 85.1 + 43.4 = $258 Mil.
Cash Flow from Operations was 299.7 + -95.1 + 63.6 + 112.8 = $381 Mil.
|Accounts Receivable was $431 Mil.
Revenue was 1049 + 1072.4 + 1027 + 1022.4 = $4,171 Mil.
Gross Profit was 970.6 + 993.9 + 951.2 + 734.9 = $3,651 Mil.
Total Current Assets was $1,596 Mil.
Total Assets was $5,267 Mil.
Property, Plant and Equipment(Net PPE) was $603 Mil.
Depreciation, Depletion and Amortization(DDA) was $123 Mil.
Selling, General & Admin. Expense(SGA) was $1,290 Mil.
Total Current Liabilities was $593 Mil.
Long-Term Debt was $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)|
|=||(446.9 / 4183.9)||/||(431.4 / 4170.8)|
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)|
|=||(3650.6 / 4170.8)||/||(3872.2 / 4183.9)|
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 - (1847.9 + 615.6) / 6723.5)||/||(1 - (1595.8 + 603) / 5266.6)|
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))|
|=||(122.7 / (122.7 + 603))||/||(131.9 / (131.9 + 615.6))|
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)|
|=||(1548.9 / 4183.9)||/||(1289.7 / 4170.8)|
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)|
|=||((0 + 775.9) / 6723.5)||/||((0 + 593) / 5266.6)|
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|
|=||(1121.5 - 258.3||-||381)||/||6723.5|
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.
T. Rowe Price Group Inc has a M-score of -2.15 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
T. Rowe Price Group Inc Annual Data
T. Rowe Price Group Inc Quarterly Data