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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 -4.54. And the median was -2.63.
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 * 1.0457||+||0.528 * 0.9963||+||0.404 * 0.961||+||0.892 * 1.0724||+||0.115 * 0.9223|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0375||+||4.679 * -0.0516||-||0.327 * 1.1919|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $12,229 Mil.|
Revenue was 50557 + 75872 + 51501 + 49605 = $227,535 Mil.
Gross Profit was 19921 + 30423 + 20548 + 19681 = $90,573 Mil.
Total Current Assets was $87,592 Mil.
Total Assets was $305,277 Mil.
Property, Plant and Equipment(Net PPE) was $23,203 Mil.
Depreciation, Depletion and Amortization(DDA) was $11,634 Mil.
Selling, General & Admin. Expense(SGA) was $14,540 Mil.
Total Current Liabilities was $68,265 Mil.
Long-Term Debt was $69,374 Mil.
Net Income was 10516 + 18361 + 11124 + 10677 = $50,678 Mil.
Non Operating Income was -510 + -263 + -149 + -175 = $-1,097 Mil.
Cash Flow from Operations was 11601 + 27463 + 13475 + 14988 = $67,527 Mil.
|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.
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)|
|=||(12229 / 227535)||/||(10905 / 212164)|
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)|
|=||(84141 / 212164)||/||(90573 / 227535)|
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 - (87592 + 23203) / 305277)||/||(1 - (67891 + 20151) / 261194)|
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))|
|=||(8969 / (8969 + 20151))||/||(11634 / (11634 + 23203))|
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)|
|=||(14540 / 227535)||/||(13068 / 212164)|
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)|
|=||((69374 + 68265) / 305277)||/||((40072 + 58729) / 261194)|
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|
|=||(50678 - -1097||-||67527)||/||305277|
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 -2.71 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