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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.
Universal Forest Products Inc has a M-score of -2.72 suggests that the company is not a 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 -2.46.
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 * 0.9696||+||0.528 * 0.8443||+||0.404 * 0.9272||+||0.892 * 1.0902||+||0.115 * 1.0139|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0351||+||4.679 * -0.042||-||0.327 * 0.9323|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|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.
Net Income was 21.789 + 7.216 + 7.995 + 14.091 = $51 Mil.
Non Operating Income was 0.686 + 0.725 + 0.049 + 0.018 = $1 Mil.
Cash Flow from Operations was 64.98 + -54.732 + 5.623 + 76.655 = $93 Mil.
|Accounts Receivable was $271 Mil.
Revenue was 738.436 + 554.494 + 470.763 + 533.366 = $2,297 Mil.
Gross Profit was 80.216 + 57.179 + 44.469 + 55.227 = $237 Mil.
Total Current Assets was $555 Mil.
Total Assets was $977 Mil.
Property, Plant and Equipment(Net PPE) was $234 Mil.
Depreciation, Depletion and Amortization(DDA) was $33 Mil.
Selling, General & Admin. Expense(SGA) was $191 Mil.
Total Current Liabilities was $165 Mil.
Long-Term Debt was $142 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)|
|=||(286.422 / 2504.267)||/||(270.949 / 2297.059)|
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)|
|=||(66.012 / 2297.059)||/||(96.988 / 2504.267)|
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 - (591.4 + 247.453) / 1021.879)||/||(1 - (554.746 + 233.773) / 977.312)|
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))|
|=||(33.226 / (33.226 + 233.773))||/||(34.619 / (34.619 + 247.453))|
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)|
|=||(215.959 / 2504.267)||/||(191.365 / 2297.059)|
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)|
|=||((95.094 + 204.398) / 1021.879)||/||((142.473 + 164.747) / 977.312)|
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|
|=||(51.091 - 1.478||-||92.526)||/||1021.879|
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 -2.72 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