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Archer-Daniels Midland Co (NYSE:ADM)
Beneish M-Score
-2.96 (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 -2.96 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: -2.96

-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 -2.64.


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 * 0.7709+0.528 * 0.9889+0.404 * 1.1438+0.892 * 0.8338+0.115 * 1.0127
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.2642+4.679 * -0.0285-0.327 * 0.9999
=-2.96

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

This Year (Dec15) TTM:Last Year (Dec14) TTM:
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 $2,010 Mil.
Total Current Liabilities was $13,505 Mil.
Long-Term Debt was $5,779 Mil.
Net Income was 718 + 252 + 386 + 493 = $1,849 Mil.
Non Operating Income was 372 + -155 + 145 + 149 = $511 Mil.
Cash Flow from Operations was 1383 + 691 + 362 + 45 = $2,481 Mil.
Accounts Receivable was $2,704 Mil.
Revenue was 20894 + 18117 + 21494 + 20696 = $81,201 Mil.
Gross Profit was 1451 + 1470 + 1172 + 675 = $4,768 Mil.
Total Current Assets was $26,028 Mil.
Total Assets was $43,997 Mil.
Property, Plant and Equipment(Net PPE) was $9,851 Mil.
Depreciation, Depletion and Amortization(DDA) was $894 Mil.
Selling, General & Admin. Expense(SGA) was $1,907 Mil.
Total Current Liabilities was $15,602 Mil.
Long-Term Debt was $5,528 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)
=(1738 / 67702) / (2704 / 81201)
=0.02567132 / 0.03330008
=0.7709

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)
=(1089 / 81201) / (865 / 67702)
=0.05871849 / 0.05937786
=0.9889

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 - (21829 + 9853) / 40157) / (1 - (26028 + 9851) / 43997)
=0.21104664 / 0.18451258
=1.1438

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
=67702 / 81201
=0.8338

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))
=(894 / (894 + 9851)) / (882 / (882 + 9853))
=0.08320149 / 0.08216116
=1.0127

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)
=(2010 / 67702) / (1907 / 81201)
=0.02968893 / 0.02348493
=1.2642

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)
=((5779 + 13505) / 40157) / ((5528 + 15602) / 43997)
=0.48021516 / 0.48026002
=0.9999

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
=(1849 - 511 - 2481) / 40157
=-0.0285

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 -2.96 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

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 1.55490.58340.8750.47840.83370.64741.17650.7709
GMI 0.9340.83620.75370.77940.64410.7030.83230.9889
AQI 1.19651.01851.01780.98241.55081.54121.56451.1438
SGI 0.73821.34081.32771.28620.87880.84020.85440.8338
DEPI 1.26750.75180.7730.78370.98560.96470.95911.0127
SGAI 1.10881.04910.9961.01071.33421.48251.48021.2642
LVGI 0.85630.91180.94070.991.04641.07351.06930.9999
TATA -0.1007-0.082-0.0611-0.0734-0.0815-0.0658-0.0044-0.0285
M-score -2.57-3.03-2.72-3.20-3.16-3.30-2.44-2.96
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