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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 -1.96. The lowest was -3.02. And the median was -2.53.
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 * 0.9524||+||0.528 * 1||+||0.404 * 1.0414||+||0.892 * 1.1191||+||0.115 * 0.9027|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0012||+||4.679 * -0.0352||-||0.327 * 2.0663|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $447 Mil.|
Revenue was 1027 + 1022.4 + 1020.8 + 984.3 = $4,055 Mil.
Gross Profit was 1027 + 1022.4 + 1020.8 + 984.3 = $4,055 Mil.
Total Current Assets was $2,258 Mil.
Total Assets was $5,962 Mil.
Property, Plant and Equipment(Net PPE) was $599 Mil.
Depreciation, Depletion and Amortization(DDA) was $114 Mil.
Selling, General & Admin. Expense(SGA) was $1,730 Mil.
Total Current Liabilities was $960 Mil.
Long-Term Debt was $0 Mil.
Net Income was 309.5 + 315.9 + 303.6 + 305.8 = $1,235 Mil.
Non Operating Income was 26.8 + 38.8 + 5.2 + 26.1 = $97 Mil.
Cash Flow from Operations was 543.8 + 75.2 + 490.5 + 238.5 = $1,348 Mil.
|Accounts Receivable was $420 Mil.
Revenue was 954.6 + 929.8 + 884.4 + 854.3 = $3,623 Mil.
Gross Profit was 954.6 + 929.8 + 884.4 + 854.3 = $3,623 Mil.
Total Current Assets was $2,159 Mil.
Total Assets was $5,463 Mil.
Property, Plant and Equipment(Net PPE) was $572 Mil.
Depreciation, Depletion and Amortization(DDA) was $96 Mil.
Selling, General & Admin. Expense(SGA) was $1,544 Mil.
Total Current Liabilities was $426 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)|
|=||(447.3 / 4054.5)||/||(419.7 / 3623.1)|
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)|
|=||(1022.4 / 3623.1)||/||(1027 / 4054.5)|
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 - (2257.7 + 599) / 5962)||/||(1 - (2159 + 571.8) / 5462.9)|
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))|
|=||(96.2 / (96.2 + 571.8))||/||(113.7 / (113.7 + 599))|
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)|
|=||(1730.1 / 4054.5)||/||(1544.1 / 3623.1)|
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 + 960) / 5962)||/||((0 + 425.7) / 5462.9)|
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|
|=||(1234.8 - 96.9||-||1348)||/||5962|
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 -2.93 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
T. Rowe Price Group Inc Annual Data
T. Rowe Price Group Inc Quarterly Data