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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 Apple Inc was -0.96. The lowest was -4.54. And the median was -2.64.
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 Apple 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 * 0.9328||+||0.528 * 0.9552||+||0.404 * 1.1349||+||0.892 * 1.2052||+||0.115 * 1.0773|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9593||+||4.679 * -0.106||-||0.327 * 1.295|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $10,905 Mil.|
Revenue was 58010 + 74599 + 42123 + 37432 = $212,164 Mil.
Gross Profit was 23656 + 29741 + 16009 + 14735 = $84,141 Mil.
Total Current Assets was $67,891 Mil.
Total Assets was $261,194 Mil.
Property, Plant and Equipment(Net PPE) was $20,151 Mil.
Depreciation, Depletion and Amortization(DDA) was $8,969 Mil.
Selling, General & Admin. Expense(SGA) was $13,068 Mil.
Total Current Liabilities was $58,729 Mil.
Long-Term Debt was $40,072 Mil.
Net Income was 13569 + 18024 + 8467 + 7748 = $47,808 Mil.
Non Operating Income was -226 + -353 + -97 + -137 = $-813 Mil.
Cash Flow from Operations was 19081 + 33722 + 13250 + 10255 = $76,308 Mil.
|Accounts Receivable was $9,700 Mil.
Revenue was 45646 + 57594 + 37472 + 35323 = $176,035 Mil.
Gross Profit was 17947 + 21846 + 13871 + 13024 = $66,688 Mil.
Total Current Assets was $70,541 Mil.
Total Assets was $205,989 Mil.
Property, Plant and Equipment(Net PPE) was $15,120 Mil.
Depreciation, Depletion and Amortization(DDA) was $7,508 Mil.
Selling, General & Admin. Expense(SGA) was $11,303 Mil.
Total Current Liabilities was $43,208 Mil.
Long-Term Debt was $16,962 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)|
|=||(10905 / 212164)||/||(9700 / 176035)|
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)|
|=||(29741 / 176035)||/||(23656 / 212164)|
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 - (67891 + 20151) / 261194)||/||(1 - (70541 + 15120) / 205989)|
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))|
|=||(7508 / (7508 + 15120))||/||(8969 / (8969 + 20151))|
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)|
|=||(13068 / 212164)||/||(11303 / 176035)|
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)|
|=||((40072 + 58729) / 261194)||/||((16962 + 43208) / 205989)|
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|
|=||(47808 - -813||-||76308)||/||261194|
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.
Apple Inc has a M-score of -2.90 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
Apple Inc Annual Data
Apple Inc Quarterly Data