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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.
T. Rowe Price Group Inc has a M-score of -1.96 signals that the company is a manipulator.
During the past 13 years, the highest Beneish M-Score of T. Rowe Price Group Inc was -1.96. The lowest was -3.94. And the median was -2.83.
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 * 0.9994||+||0.528 * 1||+||0.404 * 2.0515||+||0.892 * 1.163||+||0.115 * 0.8774|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9632||+||4.679 * -0.0307||-||0.327 * 0.6853|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $426 Mil.|
Revenue was 984.3 + 954.6 + 929.8 + 884.4 = $3,753 Mil.
Gross Profit was 984.3 + 954.6 + 929.8 + 884.4 = $3,753 Mil.
Total Current Assets was $2,130 Mil.
Total Assets was $5,669 Mil.
Property, Plant and Equipment(Net PPE) was $576 Mil.
Depreciation, Depletion and Amortization(DDA) was $103 Mil.
Selling, General & Admin. Expense(SGA) was $1,587 Mil.
Total Current Liabilities was $395 Mil.
Long-Term Debt was $0 Mil.
Net Income was 305.8 + 304.3 + 287.7 + 270.3 = $1,168 Mil.
Non Operating Income was 26.1 + 42.1 + 31.7 + 11.6 = $112 Mil.
Cash Flow from Operations was 238.5 + 487.1 + 74.9 + 430.4 = $1,231 Mil.
|Accounts Receivable was $367 Mil.
Revenue was 854.3 + 815.7 + 787.3 + 769.7 = $3,227 Mil.
Gross Profit was 854.3 + 815.7 + 787.3 + 769.7 = $3,227 Mil.
Total Current Assets was $3,018 Mil.
Total Assets was $4,799 Mil.
Property, Plant and Equipment(Net PPE) was $559 Mil.
Depreciation, Depletion and Amortization(DDA) was $86 Mil.
Selling, General & Admin. Expense(SGA) was $1,417 Mil.
Total Current Liabilities was $488 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)|
|=||(426 / 3753.1)||/||(366.5 / 3227)|
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)|
|=||(954.6 / 3227)||/||(984.3 / 3753.1)|
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 - (2130.3 + 576.2) / 5669)||/||(1 - (3017.8 + 558.7) / 4798.9)|
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))|
|=||(85.5 / (85.5 + 558.7))||/||(102.7 / (102.7 + 576.2))|
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)|
|=||(1587.3 / 3753.1)||/||(1417 / 3227)|
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 + 395.4) / 5669)||/||((0 + 488.4) / 4798.9)|
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|
|=||(1168.1 - 111.5||-||1230.9)||/||5669|
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 -1.96 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