Roots (TSX:ROOT) Beneish M-Score : -2.84 (As of Apr. 30, 2024)

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What is Roots Beneish M-Score?

The zones of discrimination for M-Score is as such:

An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator.
An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.

Good Sign:

Beneish M-Score -2.84 no higher than -1.78, which implies that the company is unlikely to be a manipulator.

The historical rank and industry rank for Roots's Beneish M-Score or its related term are showing as below:

TSX:ROOT' s Beneish M-Score Range Over the Past 10 Years
Min: -3.86 Med: -2.87 Max: -2.59
Current: -2.84

During the past 9 years, the highest Beneish M-Score of Roots was -2.59. The lowest was -3.86. And the median was -2.87.

Roots Beneish M-Score Historical Data

The historical data trend for Roots's Beneish M-Score can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

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Roots Beneish M-Score Chart

Roots Annual Data

Trend

Jan16

Jan17

Jan18

Jan19

Jan20

Jan21

Jan22

Jan23

Jan24

Beneish M-Score

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-3.86

-2.83

-2.91

-2.89

-2.84

Roots Quarterly Data
	Apr19	Jul19	Oct19	Jan20	Apr20	Jul20	Oct20	Jan21	Apr21	Jul21	Oct21	Jan22	Apr22	Jul22	Oct22	Jan23	Apr23	Jul23	Oct23	Jan24
Beneish M-Score	Get a 7-Day Free Trial															-2.89	-2.92	-2.78	-3.06	-2.84

Competitive Comparison of Roots's Beneish M-Score

For the Apparel Retail subindustry, Roots's Beneish M-Score, along with its competitors' market caps and Beneish M-Score data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

Roots's Beneish M-Score Distribution in the Retail - Cyclical Industry

For the Retail - Cyclical industry and Consumer Cyclical sector, Roots's Beneish M-Score distribution charts can be found below:

* The bar in red indicates where Roots's Beneish M-Score falls into.

Roots Beneish M-Score Calculation

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Altman Z-Score) or business trend (Piotroski 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 Roots for today is based on a combination of the following eight different indices:

-4.84

0.92 * DSRI

0.528 * GMI

0.404 * AQI

0.892 * SGI

0.115 * DEPI

-4.84

0.92 * 1.107

0.528 * 0.9939

0.404 * 1.0486

0.892 * 0.9653

0.115 * 0.9926

0.172 * SGAI

4.679 * TATA

0.327 * LVGI

0.172 * 1.0487

4.679 * -0.099645

0.327 * 0.8996

-2.84

This Year (Jan24) TTM:

Last Year (Jan23) TTM:

Total Receivables was C$6.1 Mil.
Revenue was 108.234 + 63.534 + 49.404 + 41.496 = C$262.7 Mil.
Gross Profit was 63.416 + 37.118 + 27.441 + 24.481 = C$152.5 Mil.
Total Current Assets was C$75.8 Mil.
Total Assets was C$369.9 Mil.
Property, Plant and Equipment(Net PPE) was C$102.0 Mil.
Depreciation, Depletion and Amortization(DDA) was C$29.7 Mil.
Selling, General, & Admin. Expense(SGA) was C$140.3 Mil.
Total Current Liabilities was C$57.1 Mil.
Long-Term Debt & Capital Lease Obligation was C$99.7 Mil.
Net Income was 14.621 + 0.519 + -5.334 + -7.966 = C$1.8 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = C$0.0 Mil.
Cash Flow from Operations was 44.188 + 4.146 + -1.134 + -8.505 = C$38.7 Mil.

Total Receivables was C$5.7 Mil.
Revenue was 111.461 + 69.782 + 47.801 + 43.072 = C$272.1 Mil.
Gross Profit was 62.984 + 39.428 + 28.346 + 26.218 = C$157.0 Mil.
Total Current Assets was C$96.2 Mil.
Total Assets was C$391.9 Mil.
Property, Plant and Equipment(Net PPE) was C$101.7 Mil.
Depreciation, Depletion and Amortization(DDA) was C$29.3 Mil.
Selling, General, & Admin. Expense(SGA) was C$138.6 Mil.
Total Current Liabilities was C$75.0 Mil.
Long-Term Debt & Capital Lease Obligation was C$109.7 Mil.

1. DSRI = Days Sales in Receivables Index

Measured as the ratio of Revenue in Total 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)
	=	(6.074 / 262.668)	/	(5.684 / 272.116)
	=	0.023124	/	0.020888
	=	1.107

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)
	=	(156.976 / 272.116)	/	(152.456 / 262.668)
	=	0.576872	/	0.580413
	=	0.9939

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 Property, Plant and Equipment to Total Assets.

AQI	=	(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)	/	(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
	=	(1 - (75.79 + 102) / 369.862)	/	(1 - (96.155 + 101.654) / 391.892)
	=	0.519307	/	0.495246
	=	1.0486

4. SGI = Sales Growth Index

Ratio of Revenue 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
	=	262.668	/	272.116
	=	0.9653

5. DEPI = Depreciation Index

Measured as the ratio of the rate of Depreciation, Depletion and Amortization 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))
	=	(29.324 / (29.324 + 101.654))	/	(29.706 / (29.706 + 102))
	=	0.223885	/	0.225548
	=	0.9926

Note: If the Depreciation, Depletion and Amortization data is not available, we assume that the depreciation rate is constant and set the Depreciation Index to 1.

6. SGAI = Sales, General and Administrative expenses Index

The ratio of Selling, General, & Admin. Expense(SGA) to Sales 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)
	=	(140.331 / 262.668)	/	(138.625 / 272.116)
	=	0.534252	/	0.509433
	=	1.0487

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 in leverage

LVGI	=	((LTD_t + CurrentLiabilities_t) / TotalAssets_t)	/	((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)
	=	((99.712 + 57.115) / 369.862)	/	((109.688 + 75.032) / 391.892)
	=	0.424015	/	0.471354
	=	0.8996

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
	=	(1.84 - 0	-	38.695)	/	369.862
	=	-0.099645

An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator. An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.

Roots has a M-score of -2.84 suggests that the company is unlikely to be a manipulator.

Roots Beneish M-Score Related Terms

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Roots (TSX:ROOT) Business Description

Industry

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RROTF:USA

Address

1400 Castlefield Avenue, Toronto, ON, CAN, M6B 4C4

Website

https://www.roots.com

Roots Corp provides a portfolio of apparel, leather goods, accessories, and footwear for men, women, and children under the Roots brand. Its merchandise includes genuine leather, such as jackets, bags, and luggage; kids & baby clothing; and leather, linens, towels, and accessories. The company operates through two segments: Direct-To-Consumer, which accounts for the majority of revenue, and Partners & Other. The DTC segment sells products through the company's corporate retail stores and e-commerce. The Partners & Other segment engage in the wholesale of Roots-branded products to the company's international operating partner, and it earns royalties on the retail sales of Roots-branded products. The company has operating stores in Canada, the United States, Taiwan, China, and Hong Kong.