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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 -2.15. The lowest was -3.02. And the median was -2.60.
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 * 0.9497||+||0.528 * 1.0009||+||0.404 * 1.0743||+||0.892 * 1.0723||+||0.115 * 0.9426|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0236||+||4.679 * -0.0588||-||0.327 * 1.2016|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $431 Mil.|
Revenue was 1049 + 1072.4 + 1027 + 1022.4 = $4,171 Mil.
Gross Profit was 1049 + 993.9 + 951.2 + 1022.4 = $4,017 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 $1,656 Mil.
Total Current Liabilities was $593 Mil.
Long-Term Debt was $0 Mil.
Net Income was 277.1 + 333.2 + 309.5 + 315.9 = $1,236 Mil.
Non Operating Income was 0.3 + 33 + 26.8 + 38.8 = $99 Mil.
Cash Flow from Operations was 484.8 + 342.9 + 543.8 + 75.2 = $1,447 Mil.
|Accounts Receivable was $424 Mil.
Revenue was 1020.8 + 984.3 + 954.6 + 929.8 = $3,890 Mil.
Gross Profit was 1020.8 + 912.9 + 885.5 + 929.8 = $3,749 Mil.
Total Current Assets was $2,068 Mil.
Total Assets was $5,768 Mil.
Property, Plant and Equipment(Net PPE) was $572 Mil.
Depreciation, Depletion and Amortization(DDA) was $109 Mil.
Selling, General & Admin. Expense(SGA) was $1,508 Mil.
Total Current Liabilities was $541 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)|
|=||(431.4 / 4170.8)||/||(423.6 / 3889.5)|
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)|
|=||(993.9 / 3889.5)||/||(1049 / 4170.8)|
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 - (1595.8 + 603) / 5266.6)||/||(1 - (2068.1 + 572.3) / 5768)|
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))|
|=||(108.5 / (108.5 + 572.3))||/||(122.7 / (122.7 + 603))|
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)|
|=||(1655.6 / 4170.8)||/||(1508.4 / 3889.5)|
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 + 593) / 5266.6)||/||((0 + 540.5) / 5768)|
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|
|=||(1235.7 - 98.9||-||1446.7)||/||5266.6|
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 -2.78 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