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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 -1.70. The lowest was -3.43. And the median was -2.60.
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 * 1.0134||+||0.528 * 1.0252||+||0.404 * 0.9494||+||0.892 * 0.9227||+||0.115 * 1.1919|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0736||+||4.679 * -0.0589||-||0.327 * 1.0401|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $15,754 Mil.|
Revenue was 46852 + 42358 + 50557 + 75872 = $215,639 Mil.
Gross Profit was 17813 + 16106 + 19921 + 30423 = $84,263 Mil.
Total Current Assets was $106,869 Mil.
Total Assets was $321,686 Mil.
Property, Plant and Equipment(Net PPE) was $27,010 Mil.
Depreciation, Depletion and Amortization(DDA) was $10,505 Mil.
Selling, General & Admin. Expense(SGA) was $14,194 Mil.
Total Current Liabilities was $79,006 Mil.
Long-Term Debt was $75,427 Mil.
Net Income was 9014 + 7796 + 10516 + 18361 = $45,687 Mil.
Non Operating Income was -159 + -263 + -510 + -263 = $-1,195 Mil.
Cash Flow from Operations was 16126 + 10634 + 11601 + 27463 = $65,824 Mil.
|Accounts Receivable was $16,849 Mil.
Revenue was 51501 + 49605 + 58010 + 74599 = $233,715 Mil.
Gross Profit was 20548 + 19681 + 23656 + 29741 = $93,626 Mil.
Total Current Assets was $89,378 Mil.
Total Assets was $290,479 Mil.
Property, Plant and Equipment(Net PPE) was $22,471 Mil.
Depreciation, Depletion and Amortization(DDA) was $11,257 Mil.
Selling, General & Admin. Expense(SGA) was $14,329 Mil.
Total Current Liabilities was $80,610 Mil.
Long-Term Debt was $53,463 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)|
|=||(15754 / 215639)||/||(16849 / 233715)|
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)|
|=||(93626 / 233715)||/||(84263 / 215639)|
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 - (106869 + 27010) / 321686)||/||(1 - (89378 + 22471) / 290479)|
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))|
|=||(11257 / (11257 + 22471))||/||(10505 / (10505 + 27010))|
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)|
|=||(14194 / 215639)||/||(14329 / 233715)|
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)|
|=||((75427 + 79006) / 321686)||/||((53463 + 80610) / 290479)|
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|
|=||(45687 - -1195||-||65824)||/||321686|
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 -2.82 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