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Archer-Daniels Midland Co (NYSE:ADM)
Beneish M-Score
-2.36 (As of Today)

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.

Archer-Daniels Midland Co has a M-score of -2.36 suggests that the company is not a manipulator.

ADM' s Beneish M-Score Range Over the Past 10 Years
Min: -3.35   Max: -1.22
Current: -2.36

-3.35
-1.22

During the past 13 years, the highest Beneish M-Score of Archer-Daniels Midland Co was -1.22. The lowest was -3.35. And the median was -2.52.


Definition

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 Archer-Daniels Midland Co 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 * 1.1868+0.528 * 1.216+0.404 * 1.1802+0.892 * 0.8551+0.115 * 1.0014
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1013+4.679 * -0.0171-0.327 * 1.0394
=-2.36

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $2,257 Mil.
Revenue was 15629 + 14384 + 16445 + 16565 = $63,023 Mil.
Gross Profit was 757 + 796 + 865 + 1089 = $3,507 Mil.
Total Current Assets was $20,867 Mil.
Total Assets was $40,098 Mil.
Property, Plant and Equipment(Net PPE) was $9,802 Mil.
Depreciation, Depletion and Amortization(DDA) was $893 Mil.
Selling, General & Admin. Expense(SGA) was $1,988 Mil.
Total Current Liabilities was $13,778 Mil.
Long-Term Debt was $5,561 Mil.
Net Income was 284 + 230 + 718 + 252 = $1,484 Mil.
Non Operating Income was 212 + 33 + 372 + -155 = $462 Mil.
Cash Flow from Operations was -389 + 23 + 1383 + 691 = $1,708 Mil.
Accounts Receivable was $2,224 Mil.
Revenue was 17186 + 17506 + 20894 + 18117 = $73,703 Mil.
Gross Profit was 964 + 1102 + 1451 + 1470 = $4,987 Mil.
Total Current Assets was $22,588 Mil.
Total Assets was $40,568 Mil.
Property, Plant and Equipment(Net PPE) was $9,897 Mil.
Depreciation, Depletion and Amortization(DDA) was $903 Mil.
Selling, General & Admin. Expense(SGA) was $2,111 Mil.
Total Current Liabilities was $12,859 Mil.
Long-Term Debt was $5,965 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(2257 / 63023) / (2224 / 73703)
=0.03581232 / 0.03017516
=1.1868

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(4987 / 73703) / (3507 / 63023)
=0.06766346 / 0.05564635
=1.216

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (20867 + 9802) / 40098) / (1 - (22588 + 9897) / 40568)
=0.23514889 / 0.19924571
=1.1802

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=63023 / 73703
=0.8551

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))
=(903 / (903 + 9897)) / (893 / (893 + 9802))
=0.08361111 / 0.08349696
=1.0014

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)
=(1988 / 63023) / (2111 / 73703)
=0.03154404 / 0.02864198
=1.1013

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)
=((5561 + 13778) / 40098) / ((5965 + 12859) / 40568)
=0.48229338 / 0.46401104
=1.0394

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(1484 - 462 - 1708) / 40098
=-0.0171

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.

Archer-Daniels Midland Co has a M-score of -2.36 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Archer-Daniels Midland Co Annual Data

Jun06Jun07Jun08Jun09Jun10Jun11Jun12Dec13Dec14Dec15
DSRI 1.07061.19081.13050.64230.93950.60050.64810.92950.92760.7709
GMI 0.83461.1021.33630.93140.94831.16891.29380.95130.73750.9889
AQI 0.97990.81340.76121.10731.10530.85420.94890.971.58761.1438
SGI 1.01821.20281.58610.99130.89131.30791.10361.00860.90420.8338
DEPI 1.03011.05671.13671.02850.94281.12131.06240.96670.98911.0127
SGAI 1.08360.8330.74871.00381.11090.88110.91451.07261.1991.2642
LVGI 1.0041.04611.19840.86650.94381.03020.99870.94771.00030.9999
TATA -0.0240.02080.1168-0.125-0.03740.0875-0.052-0.0935-0.0734-0.0285
M-score -2.62-2.03-1.22-3.35-2.80-2.11-2.80-3.01-2.91-2.96

Archer-Daniels Midland Co Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 0.80291.2050.660.83370.64741.17650.77091.16581.1868
GMI 0.86230.77740.77190.64410.7030.83230.98891.15791.216
AQI 1.01851.01780.98241.55081.54121.56451.14381.1611.1802
SGI 0.97410.96410.93230.87880.84020.85440.83380.82780.8551
DEPI 0.97881.00381.01410.98560.96470.95911.01270.99921.0014
SGAI 1.03680.99771.02241.33421.48681.48431.26791.19661.1013
LVGI 0.91180.94070.991.04641.07351.06930.99990.99331.0394
TATA -0.082-0.0611-0.0734-0.0815-0.0659-0.0046-0.0286-0.0321-0.0171
M-score -3.11-2.70-3.32-3.16-3.31-2.44-2.97-2.51-2.36
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