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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 0.42. The lowest was -3.57. And the median was -2.54.
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 * 0.9942||+||0.528 * 0.8488||+||0.404 * 0.9796||+||0.892 * 1.059||+||0.115 * 0.9632|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0809||+||4.679 * -0.0631||-||0.327 * 0.8662|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $319 Mil.|
Revenue was 872.093 + 682.151 + 653.601 + 762.275 = $2,970 Mil.
Gross Profit was 131.487 + 102.739 + 97.173 + 110.706 = $442 Mil.
Total Current Assets was $730 Mil.
Total Assets was $1,195 Mil.
Property, Plant and Equipment(Net PPE) was $257 Mil.
Depreciation, Depletion and Amortization(DDA) was $41 Mil.
Selling, General & Admin. Expense(SGA) was $283 Mil.
Total Current Liabilities was $239 Mil.
Long-Term Debt was $85 Mil.
Net Income was 33.398 + 19.212 + 18.9 + 25.556 = $97 Mil.
Non Operating Income was 0.11 + 0.081 + 0.091 + 0.089 = $0 Mil.
Cash Flow from Operations was 69.998 + -29.957 + 47.387 + 84.587 = $172 Mil.
|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.
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)|
|=||(318.505 / 2970.12)||/||(302.538 / 2804.775)|
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)|
|=||(354.366 / 2804.775)||/||(442.105 / 2970.12)|
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 - (729.705 + 256.899) / 1194.506)||/||(1 - (679.444 + 257.731) / 1139.666)|
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))|
|=||(39.779 / (39.779 + 257.731))||/||(41.41 / (41.41 + 256.899))|
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)|
|=||(282.729 / 2970.12)||/||(247.012 / 2804.775)|
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)|
|=||((84.53 + 239.183) / 1194.506)||/||((122.303 + 234.249) / 1139.666)|
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|
|=||(97.066 - 0.371||-||172.015)||/||1194.506|
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 -2.79 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