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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 -3.02. And the median was -2.51.
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 * 0.9311||+||0.528 * 1.0012||+||0.404 * 1.1884||+||0.892 * 1.0279||+||0.115 * 0.9149|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0331||+||4.679 * 0.0033||-||0.327 * 0.6156|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $428 Mil.|
Revenue was 994.1 + 1052.2 + 1049 + 1072.4 = $4,168 Mil.
Gross Profit was 994.1 + 1052.2 + 1049 + 993.9 = $4,089 Mil.
Total Current Assets was $1,751 Mil.
Total Assets was $6,204 Mil.
Property, Plant and Equipment(Net PPE) was $613 Mil.
Depreciation, Depletion and Amortization(DDA) was $129 Mil.
Selling, General & Admin. Expense(SGA) was $1,762 Mil.
Total Current Liabilities was $615 Mil.
Long-Term Debt was $0 Mil.
Net Income was 295.2 + 303.2 + 277.1 + 333.2 = $1,209 Mil.
Non Operating Income was 85.1 + 43.4 + 0.3 + 33 = $162 Mil.
Cash Flow from Operations was 63.6 + 134.9 + 484.8 + 342.9 = $1,026 Mil.
|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 + 912.9 = $3,983 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 $1,659 Mil.
Total Current Liabilities was $960 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)|
|=||(428.1 / 4167.7)||/||(447.3 / 4054.5)|
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)|
|=||(1052.2 / 4054.5)||/||(994.1 / 4167.7)|
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 - (1751 + 612.7) / 6203.9)||/||(1 - (2257.7 + 599) / 5962)|
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))|
|=||(113.7 / (113.7 + 599))||/||(129.4 / (129.4 + 612.7))|
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)|
|=||(1761.5 / 4167.7)||/||(1658.7 / 4054.5)|
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 + 615) / 6203.9)||/||((0 + 960) / 5962)|
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|
|=||(1208.7 - 161.8||-||1026.2)||/||6203.9|
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 -2.32 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