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GuruFocus has detected 1 Warning Sign with Ross Stores Inc $ROST.
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Ross Stores Inc (NAS:ROST)
Beneish M-Score
-2.85 (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.

Ross Stores Inc has a M-score of -2.85 suggests that the company is not a manipulator.

ROST' s Beneish M-Score Range Over the Past 10 Years
Min: -3.75   Max: 0.79
Current: -2.85

-3.75
0.79

During the past 13 years, the highest Beneish M-Score of Ross Stores Inc was 0.79. The lowest was -3.75. And the median was -2.61.


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 Ross Stores 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 * 0.9682+0.528 * 0.9809+0.404 * 0.9926+0.892 * 1.0822+0.115 * 0.9407
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0088+4.679 * -0.0833-0.327 * 1.0013
=-2.85

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Apr17) TTM:Last Year (Apr16) TTM:
Accounts Receivable was $101 Mil.
Revenue was 3306.429 + 3510.158 + 3086.687 + 3180.917 = $13,084 Mil.
Gross Profit was 976.463 + 970.595 + 880.595 + 929.072 = $3,757 Mil.
Total Current Assets was $3,065 Mil.
Total Assets was $5,553 Mil.
Property, Plant and Equipment(Net PPE) was $2,309 Mil.
Depreciation, Depletion and Amortization(DDA) was $304 Mil.
Selling, General & Admin. Expense(SGA) was $1,928 Mil.
Total Current Liabilities was $1,938 Mil.
Long-Term Debt was $397 Mil.
Net Income was 321.018 + 300.568 + 244.546 + 281.906 = $1,148 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 520.838 + 529.623 + 249.674 + 310.474 = $1,611 Mil.
Accounts Receivable was $96 Mil.
Revenue was 3088.995 + 3250.726 + 2782.855 + 2968.27 = $12,091 Mil.
Gross Profit was 912.79 + 864.135 + 779.508 + 848.79 = $3,405 Mil.
Total Current Assets was $2,629 Mil.
Total Assets was $5,114 Mil.
Property, Plant and Equipment(Net PPE) was $2,318 Mil.
Depreciation, Depletion and Amortization(DDA) was $285 Mil.
Selling, General & Admin. Expense(SGA) was $1,766 Mil.
Total Current Liabilities was $1,751 Mil.
Long-Term Debt was $396 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)
=(100.84 / 13084.191) / (96.244 / 12090.846)
=0.00770701 / 0.00796007
=0.9682

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)
=(3405.223 / 12090.846) / (3756.725 / 13084.191)
=0.28163645 / 0.28711939
=0.9809

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 - (3064.735 + 2308.689) / 5552.975) / (1 - (2629.123 + 2318.456) / 5114.177)
=0.0323342 / 0.03257572
=0.9926

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
=13084.191 / 12090.846
=1.0822

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))
=(285.39 / (285.39 + 2318.456)) / (304.457 / (304.457 + 2308.689))
=0.10960326 / 0.11650975
=0.9407

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)
=(1928.303 / 13084.191) / (1766.381 / 12090.846)
=0.14737656 / 0.14609242
=1.0088

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)
=((396.611 + 1937.723) / 5552.975) / ((396.142 + 1750.896) / 5114.177)
=0.42037538 / 0.41982082
=1.0013

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
=(1148.038 - 0 - 1610.609) / 5552.975
=-0.0833

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.

Ross Stores Inc has a M-score of -2.85 suggests that the company will not 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 local exchange's currency.

Ross Stores Inc Annual Data

Jan08Jan09Jan10Jan11Jan12Jan13Jan14Jan15Jan16Jan17
DSRI 1.16021.01220.970.93711.02381.03820.9981.08440.92920.9472
GMI 0.99030.9630.91240.95170.98750.98670.99380.99780.9980.9813
AQI 1.09480.86420.75680.98821.430.97080.99680.88220.90531.0019
SGI 1.07271.08551.10761.09491.09441.12931.05241.07931.08141.0776
DEPI 1.01910.95540.89861.02781.23081.03241.11581.06550.88520.9129
SGAI 1.01091.01810.9870.99320.9690.97641.00870.98050.99541.0089
LVGI 0.9360.95871.03190.99570.940.94540.92431.10710.93640.986
TATA -0.039-0.118-0.161-0.0372-0.0494-0.0525-0.0474-0.0956-0.0628-0.0831
M-score -2.40-3.01-3.33-2.65-2.39-2.57-2.62-2.85-2.80-2.86

Ross Stores Inc Quarterly Data

Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16Jan17Apr17
DSRI 1.08440.95880.94890.98270.92921.01911.031.04450.94720.9682
GMI 0.99780.9870.99110.99060.9981.00620.9990.9980.98130.9809
AQI 0.88220.88790.86790.94440.90530.92740.95640.92981.00190.9926
SGI 1.07931.08951.09371.09041.08141.07011.06641.07551.07761.0822
DEPI 1.06551.04971.00380.90810.88520.86940.87340.90440.91290.9407
SGAI 0.98050.97770.98860.99330.99541.00361.00220.99971.00891.0088
LVGI 1.10711.08481.06640.9440.93640.93080.96070.9760.9861.0013
TATA -0.0956-0.0648-0.0497-0.0302-0.0628-0.0689-0.0892-0.0957-0.0831-0.0833
M-score -2.85-2.81-2.75-2.58-2.80-2.74-2.83-2.85-2.86-2.85
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