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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 -1.90. The lowest was -3.06. And the median was -2.58.
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 * 1.015||+||0.528 * 1.0006||+||0.404 * 1.1246||+||0.892 * 1.0053||+||0.115 * 0.9663|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0278||+||4.679 * 0.1286||-||0.327 * 1.2588|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $455 Mil.|
Revenue was 1091.2 + 1092.9 + 1044.7 + 994.1 = $4,223 Mil.
Gross Profit was 1010.4 + 1010.9 + 968.3 + 918.8 = $3,908 Mil.
Total Current Assets was $1,660 Mil.
Total Assets was $6,225 Mil.
Property, Plant and Equipment(Net PPE) was $615 Mil.
Depreciation, Depletion and Amortization(DDA) was $133 Mil.
Selling, General & Admin. Expense(SGA) was $1,574 Mil.
Total Current Liabilities was $529 Mil.
Long-Term Debt was $0 Mil.
Net Income was 379.8 + 327.8 + 195.3 + 295.2 = $1,198 Mil.
Non Operating Income was 12.2 + 88.3 + 41.5 + 85.1 = $227 Mil.
Cash Flow from Operations was -97.7 + 299.7 + -95.1 + 63.6 = $171 Mil.
|Accounts Receivable was $446 Mil.
Revenue was 1052.2 + 1049 + 1072.4 + 1027 = $4,201 Mil.
Gross Profit was 974.2 + 970.6 + 993.9 + 951.2 = $3,890 Mil.
Total Current Assets was $1,618 Mil.
Total Assets was $5,107 Mil.
Property, Plant and Equipment(Net PPE) was $607 Mil.
Depreciation, Depletion and Amortization(DDA) was $126 Mil.
Selling, General & Admin. Expense(SGA) was $1,523 Mil.
Total Current Liabilities was $345 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)|
|=||(455.1 / 4222.9)||/||(446 / 4200.6)|
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)|
|=||(3889.9 / 4200.6)||/||(3908.4 / 4222.9)|
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 - (1660 + 615.1) / 6225)||/||(1 - (1618.3 + 607.1) / 5106.9)|
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))|
|=||(126.3 / (126.3 + 607.1))||/||(133.4 / (133.4 + 615.1))|
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)|
|=||(1573.9 / 4222.9)||/||(1523.3 / 4200.6)|
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 + 529.2) / 6225)||/||((0 + 344.9) / 5106.9)|
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|
|=||(1198.1 - 227.1||-||170.5)||/||6225|
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 -1.90 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