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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 Archer-Daniels Midland Co was -1.22. The lowest was -3.39. And the median was -2.54.
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 * 1.1765||+||0.528 * 0.8323||+||0.404 * 1.5645||+||0.892 * 0.8544||+||0.115 * 0.9591|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.4802||+||4.679 * -0.0044||-||0.327 * 1.0693|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $2,132 Mil.|
Revenue was 16565 + 17186 + 17506 + 20894 = $72,151 Mil.
Gross Profit was 1089 + 964 + 1102 + 1451 = $4,606 Mil.
Total Current Assets was $23,045 Mil.
Total Assets was $40,877 Mil.
Property, Plant and Equipment(Net PPE) was $9,900 Mil.
Depreciation, Depletion and Amortization(DDA) was $906 Mil.
Selling, General & Admin. Expense(SGA) was $2,165 Mil.
Total Current Liabilities was $14,130 Mil.
Long-Term Debt was $5,829 Mil.
Net Income was 252 + 386 + 493 + 701 = $1,832 Mil.
Non Operating Income was -155 + 145 + 149 + 238 = $377 Mil.
Cash Flow from Operations was 691 + 362 + 45 + 538 = $1,636 Mil.
|Accounts Receivable was $2,121 Mil.
Revenue was 18117 + 21494 + 20696 + 24143 = $84,450 Mil.
Gross Profit was 1470 + 1172 + 675 + 1170 = $4,487 Mil.
Total Current Assets was $26,639 Mil.
Total Assets was $41,821 Mil.
Property, Plant and Equipment(Net PPE) was $9,995 Mil.
Depreciation, Depletion and Amortization(DDA) was $874 Mil.
Selling, General & Admin. Expense(SGA) was $1,712 Mil.
Total Current Liabilities was $13,751 Mil.
Long-Term Debt was $5,346 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)|
|=||(2132 / 72151)||/||(2121 / 84450)|
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)|
|=||(964 / 84450)||/||(1089 / 72151)|
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 - (23045 + 9900) / 40877)||/||(1 - (26639 + 9995) / 41821)|
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))|
|=||(874 / (874 + 9995))||/||(906 / (906 + 9900))|
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)|
|=||(2165 / 72151)||/||(1712 / 84450)|
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)|
|=||((5829 + 14130) / 40877)||/||((5346 + 13751) / 41821)|
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|
|=||(1832 - 377||-||1636)||/||40877|
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 -2.44 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
Archer-Daniels Midland Co Annual Data
Archer-Daniels Midland Co Quarterly Data