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Archer-Daniels Midland Co (NYSE:ADM)
Beneish M-Score
-2.21 (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 -2.21 signals that the company is a manipulator.

ADM' s 10-Year Beneish M-Score Range
Min: -3.34   Max: -1.21
Current: -2.21

-3.34
-1.21

During the past 13 years, the highest Beneish M-Score of Archer-Daniels Midland Co was -1.21. The lowest was -3.34. And the median was -2.50.


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 * 1.3307+0.528 * 0.7537+0.404 * 1.0178+0.892 * 1.3277+0.115 * 1.0038
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.996+4.679 * -0.0478-0.327 * 0.9407
=-2.21

* 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 $6,219 Mil.
Revenue was 21494 + 20696 + 24143 + 21393 = $87,726 Mil.
Gross Profit was 1172 + 675 + 1170 + 1156 = $4,173 Mil.
Total Current Assets was $24,658 Mil.
Total Assets was $39,930 Mil.
Property, Plant and Equipment(Net PPE) was $10,110 Mil.
Depreciation, Depletion and Amortization(DDA) was $887 Mil.
Selling, General & Admin. Expense(SGA) was $1,690 Mil.
Total Current Liabilities was $11,891 Mil.
Long-Term Debt was $5,369 Mil.
Net Income was 533 + 267 + 374 + 476 = $1,650 Mil.
Non Operating Income was 75 + 155 + -607 + 75 = $-302 Mil.
Cash Flow from Operations was 1341 + -358 + 357 + 2521 = $3,861 Mil.
Accounts Receivable was $3,520 Mil.
Revenue was 22541 + 21727 + 0 + 21808 = $66,076 Mil.
Gross Profit was 807 + 756 + 0 + 806 = $2,369 Mil.
Total Current Assets was $25,036 Mil.
Total Assets was $40,238 Mil.
Property, Plant and Equipment(Net PPE) was $10,091 Mil.
Depreciation, Depletion and Amortization(DDA) was $889 Mil.
Selling, General & Admin. Expense(SGA) was $1,278 Mil.
Total Current Liabilities was $13,123 Mil.
Long-Term Debt was $5,366 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)
=(6219 / 87726) / (3520 / 66076)
=0.07089118 / 0.05327199
=1.3307

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)
=(675 / 66076) / (1172 / 87726)
=0.03585265 / 0.04756857
=0.7537

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 - (24658 + 10110) / 39930) / (1 - (25036 + 10091) / 40238)
=0.12927623 / 0.12701924
=1.0178

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
=87726 / 66076
=1.3277

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))
=(889 / (889 + 10091)) / (887 / (887 + 10110))
=0.08096539 / 0.08065836
=1.0038

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)
=(1690 / 87726) / (1278 / 66076)
=0.01926453 / 0.01934136
=0.996

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)
=((5369 + 11891) / 39930) / ((5366 + 13123) / 40238)
=0.43225645 / 0.45949103
=0.9407

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
=(1650 - -302 - 3861) / 39930
=-0.0478

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 -2.21 signals that the company is likely to 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

Jun05Jun06Jun07Jun08Jun09Jun10Jun11Jun12Dec12Dec13
DSRI 1.02111.07051.19081.13050.64230.93951.22590.31740.98630.9423
GMI 0.87850.83471.1021.33630.93140.94831.16891.29381.02970.9238
AQI 1.02160.97990.81340.76121.10791.11370.82510.93671.00990.999
SGI 0.99431.01811.20281.58610.99130.89131.30791.10361.01710.9917
DEPI 1.02121.02951.05671.13671.09270.88751.12131.06241.00620.9607
SGAI 0.77551.08380.8330.74871.00381.11090.88110.91451.00681.0653
LVGI 0.88331.0041.04611.19840.87740.92421.04291.00011.02020.9241
TATA -0.0774-0.0240.02070.1168-0.1241-0.04170.0878-0.052-0.0134-0.0806
M-score -2.80-2.62-2.03-1.22-3.34-2.82-1.55-3.11-2.53-2.95

Archer-Daniels Midland Co Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.24320.31740.28021.55571.37921.55491.10081.3307
GMI 1.26761.29381.36421.2351.1490.9340.83620.7537
AQI 0.97450.93670.96891.04751.10261.19651.01851.0178
SGI 1.21391.10361.03690.7420.74210.73821.34081.3277
DEPI 1.12051.06240.99320.9850.98250.97950.97881.0038
SGAI 0.89750.91450.94790.99351.05911.10881.04910.996
LVGI 0.88481.00011.05520.97650.90230.85630.91180.9407
TATA -0.0915-0.052-0.0185-0.0708-0.11-0.1483-0.0684-0.0478
M-score -3.21-3.11-3.03-2.38-2.74-2.83-2.46-2.21
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