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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 Universal Forest Products Inc was 0.55. The lowest was -3.61. And the median was -2.53.
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 Universal Forest Products 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 * 0.9431||+||0.528 * 0.9676||+||0.404 * 0.992||+||0.892 * 1.12||+||0.115 * 0.9179|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0212||+||4.679 * -0.0201||-||0.327 * 1.0675|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $303 Mil.|
Revenue was 838.171 + 633.025 + 620.09 + 713.489 = $2,805 Mil.
Gross Profit was 112.443 + 79.582 + 72.755 + 89.586 = $354 Mil.
Total Current Assets was $679 Mil.
Total Assets was $1,140 Mil.
Property, Plant and Equipment(Net PPE) was $258 Mil.
Depreciation, Depletion and Amortization(DDA) was $40 Mil.
Selling, General & Admin. Expense(SGA) was $247 Mil.
Total Current Liabilities was $234 Mil.
Long-Term Debt was $122 Mil.
Net Income was 25.976 + 10.162 + 9.313 + 19.234 = $65 Mil.
Non Operating Income was 0.112 + 0.083 + 0.132 + 0.118 = $0 Mil.
Cash Flow from Operations was 87.367 + -50.545 + 2.592 + 47.724 = $87 Mil.
|Accounts Receivable was $286 Mil.
Revenue was 772.752 + 553.998 + 525.737 + 651.78 = $2,504 Mil.
Gross Profit was 96.988 + 66.012 + 64.868 + 78.289 = $306 Mil.
Total Current Assets was $591 Mil.
Total Assets was $1,022 Mil.
Property, Plant and Equipment(Net PPE) was $247 Mil.
Depreciation, Depletion and Amortization(DDA) was $35 Mil.
Selling, General & Admin. Expense(SGA) was $216 Mil.
Total Current Liabilities was $204 Mil.
Long-Term Debt was $95 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)|
|=||(302.538 / 2804.775)||/||(286.422 / 2504.267)|
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)|
|=||(79.582 / 2504.267)||/||(112.443 / 2804.775)|
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 - (679.444 + 257.731) / 1139.666)||/||(1 - (591.4 + 247.453) / 1021.879)|
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))|
|=||(34.619 / (34.619 + 247.453))||/||(39.779 / (39.779 + 257.731))|
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)|
|=||(247.012 / 2804.775)||/||(215.959 / 2504.267)|
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)|
|=||((122.303 + 234.249) / 1139.666)||/||((95.094 + 204.398) / 1021.879)|
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|
|=||(64.685 - 0.445||-||87.138)||/||1139.666|
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.
Universal Forest Products Inc has a M-score of -2.57 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
Universal Forest Products Inc Annual Data
Universal Forest Products Inc Quarterly Data