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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.
Apple Inc has a M-score of -2.70 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Apple Inc was -0.35. The lowest was -4.54. 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 * 1.1904||+||0.528 * 0.9968||+||0.404 * 1.067||+||0.892 * 1.0516||+||0.115 * 0.8729|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.022||+||4.679 * -0.0777||-||0.327 * 1.2683|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $16,841 Mil.|
Revenue was 37432 + 45646 + 57594 + 37472 = $178,144 Mil.
Gross Profit was 14735 + 17947 + 21846 + 13871 = $68,399 Mil.
Total Current Assets was $67,949 Mil.
Total Assets was $222,520 Mil.
Property, Plant and Equipment(Net PPE) was $17,585 Mil.
Depreciation, Depletion and Amortization(DDA) was $7,760 Mil.
Selling, General & Admin. Expense(SGA) was $11,508 Mil.
Total Current Liabilities was $46,205 Mil.
Long-Term Debt was $29,030 Mil.
Net Income was 7748 + 10223 + 13072 + 7512 = $38,555 Mil.
Non Operating Income was -137 + -100 + -97 + -194 = $-528 Mil.
Cash Flow from Operations was 10255 + 13538 + 22670 + 9908 = $56,371 Mil.
|Accounts Receivable was $13,453 Mil.
Revenue was 35323 + 43603 + 54512 + 35966 = $169,404 Mil.
Gross Profit was 13024 + 16349 + 21060 + 14401 = $64,834 Mil.
Total Current Assets was $68,219 Mil.
Total Assets was $199,856 Mil.
Property, Plant and Equipment(Net PPE) was $16,327 Mil.
Depreciation, Depletion and Amortization(DDA) was $5,955 Mil.
Selling, General & Admin. Expense(SGA) was $10,708 Mil.
Total Current Liabilities was $36,319 Mil.
Long-Term Debt was $16,958 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)|
|=||(16841 / 178144)||/||(13453 / 169404)|
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)|
|=||(17947 / 169404)||/||(14735 / 178144)|
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 - (67949 + 17585) / 222520)||/||(1 - (68219 + 16327) / 199856)|
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))|
|=||(5955 / (5955 + 16327))||/||(7760 / (7760 + 17585))|
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)|
|=||(11508 / 178144)||/||(10708 / 169404)|
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)|
|=||((29030 + 46205) / 222520)||/||((16958 + 36319) / 199856)|
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|
|=||(38555 - -528||-||56371)||/||222520|
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 -2.70 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