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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 -3.35. And the median was -2.64.
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 * 1.1903||+||0.528 * 1.0049||+||0.404 * 1.0683||+||0.892 * 0.9209||+||0.115 * 0.973|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0832||+||4.679 * -0.0141||-||0.327 * 1.0303|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $1,905 Mil.|
Revenue was 16501 + 15832 + 15629 + 14384 = $62,346 Mil.
Gross Profit was 1026 + 1105 + 757 + 796 = $3,684 Mil.
Total Current Assets was $21,045 Mil.
Total Assets was $39,769 Mil.
Property, Plant and Equipment(Net PPE) was $9,758 Mil.
Depreciation, Depletion and Amortization(DDA) was $900 Mil.
Selling, General & Admin. Expense(SGA) was $2,026 Mil.
Total Current Liabilities was $13,173 Mil.
Long-Term Debt was $6,504 Mil.
Net Income was 424 + 341 + 284 + 230 = $1,279 Mil.
Non Operating Income was 129 + -9 + 212 + 33 = $365 Mil.
Cash Flow from Operations was 319 + 1522 + -389 + 23 = $1,475 Mil.
|Accounts Receivable was $1,738 Mil.
Revenue was 16445 + 16565 + 17186 + 17506 = $67,702 Mil.
Gross Profit was 865 + 1089 + 964 + 1102 = $4,020 Mil.
Total Current Assets was $21,829 Mil.
Total Assets was $40,157 Mil.
Property, Plant and Equipment(Net PPE) was $9,853 Mil.
Depreciation, Depletion and Amortization(DDA) was $882 Mil.
Selling, General & Admin. Expense(SGA) was $2,031 Mil.
Total Current Liabilities was $13,505 Mil.
Long-Term Debt was $5,779 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)|
|=||(1905 / 62346)||/||(1738 / 67702)|
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)|
|=||(4020 / 67702)||/||(3684 / 62346)|
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 - (21045 + 9758) / 39769)||/||(1 - (21829 + 9853) / 40157)|
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))|
|=||(882 / (882 + 9853))||/||(900 / (900 + 9758))|
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)|
|=||(2026 / 62346)||/||(2031 / 67702)|
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)|
|=||((6504 + 13173) / 39769)||/||((5779 + 13505) / 40157)|
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|
|=||(1279 - 365||-||1475)||/||39769|
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