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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 -1.04. The lowest was -4.47. And the median was -2.57.
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 * 1.1692||+||0.528 * 1.0419||+||0.404 * 0.9154||+||0.892 * 0.9282||+||0.115 * 1.2055|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0563||+||4.679 * -0.0586||-||0.327 * 1.0802|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $14,057 Mil.|
Revenue was 78351 + 46852 + 42358 + 50557 = $218,118 Mil.
Gross Profit was 30176 + 17813 + 16106 + 19921 = $84,016 Mil.
Total Current Assets was $103,332 Mil.
Total Assets was $331,141 Mil.
Property, Plant and Equipment(Net PPE) was $26,510 Mil.
Depreciation, Depletion and Amortization(DDA) was $10,538 Mil.
Selling, General & Admin. Expense(SGA) was $14,292 Mil.
Total Current Liabilities was $84,130 Mil.
Long-Term Debt was $73,557 Mil.
Net Income was 17891 + 9014 + 7796 + 10516 = $45,217 Mil.
Non Operating Income was 122 + -159 + -263 + -510 = $-810 Mil.
Cash Flow from Operations was 27056 + 16126 + 10634 + 11601 = $65,417 Mil.
|Accounts Receivable was $12,953 Mil.
Revenue was 75872 + 51501 + 49605 + 58010 = $234,988 Mil.
Gross Profit was 30423 + 20548 + 19681 + 23656 = $94,308 Mil.
Total Current Assets was $76,219 Mil.
Total Assets was $293,284 Mil.
Property, Plant and Equipment(Net PPE) was $22,300 Mil.
Depreciation, Depletion and Amortization(DDA) was $11,636 Mil.
Selling, General & Admin. Expense(SGA) was $14,577 Mil.
Total Current Liabilities was $76,092 Mil.
Long-Term Debt was $53,204 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)|
|=||(14057 / 218118)||/||(12953 / 234988)|
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)|
|=||(94308 / 234988)||/||(84016 / 218118)|
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 - (103332 + 26510) / 331141)||/||(1 - (76219 + 22300) / 293284)|
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))|
|=||(11636 / (11636 + 22300))||/||(10538 / (10538 + 26510))|
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)|
|=||(14292 / 218118)||/||(14577 / 234988)|
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)|
|=||((73557 + 84130) / 331141)||/||((53204 + 76092) / 293284)|
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|
|=||(45217 - -810||-||65417)||/||331141|
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 -2.69 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