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T. Rowe Price Group Inc (NAS:TROW)
Beneish M-Score
-1.96 (As of Today)

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.

TROW' s 10-Year Beneish M-Score Range
Min: -3.02   Max: -1.96
Current: -1.96

-3.02
-1.96

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 -2.62.


Definition

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
=-1.96

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

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

Measured as the ratio of days’ sales in receivables in year t to year t-1.

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)
=0.11350617 / 0.11357298
=0.9994

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(954.6 / 3227) / (984.3 / 3753.1)
=1 / 1
=1

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

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)
=0.52257894 / 0.25472504
=2.0515

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=3753.1 / 3227
=1.163

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))
=0.13272276 / 0.15127412
=0.8774

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)
=0.42293038 / 0.43910753
=0.9632

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)
=0.06974775 / 0.10177332
=0.6853

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(1168.1 - 111.5 - 1230.9) / 5669
=-0.0307

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.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

T. Rowe Price Group Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.70371.57370.98660.85221.05630.9775
GMI 1.00711.00711.01021.0050.9311
AQI 1.00860.94761.01190.98561.08020.9233
SGI 0.94970.88241.26761.16051.10031.1528
DEPI 1.05621.09191.12360.89320.8940.9235
SGAI 1.06991.04320.88270.96481.16390.9572
LVGI 0.68110.84770.97820.9191.81710.5033
TATA -0.0705-0.0278-0.0258-0.0528-0.0214-0.0494
M-score -3.02-2.15-2.32-2.70-2.75-2.47

T. Rowe Price Group Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.93490.93431.0521.05631.01560.98670.95730.97750.98790.9994
GMI 1.01821.00271.00290.92160.92260.90520.90820.97440.98231
AQI 0.56920.68280.99881.08020.8580.80990.94350.92331.9022.0515
SGI 1.12031.0711.06751.10031.11321.14571.14961.15281.16521.163
DEPI 0.87790.89250.8980.8940.90570.90350.92680.92350.89460.8774
SGAI 0.97440.99470.95541.20011.17121.20041.20541.01470.9990.9632
LVGI 1.32910.91470.84741.81711.13691.42711.3050.50331.01460.6853
TATA -0.0312-0.0197-0.0217-0.0214-0.0547-0.0511-0.05-0.0494-0.0435-0.0307
M-score -2.86-2.68-2.43-2.76-2.80-2.91-2.83-2.49-2.21-1.96
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