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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.
Archer-Daniels Midland Co has a M-score of -2.46 suggests that the company is not a 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 -2.49.
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 * 1.1008||+||0.528 * 0.8362||+||0.404 * 1.0185||+||0.892 * 1.3408||+||0.115 * 0.9788|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0491||+||4.679 * -0.0684||-||0.327 * 0.9118|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was $5,244 Mil.|
Revenue was 20696 + 24143 + 21393 + 22541 = $88,773 Mil.
Gross Profit was 675 + 1170 + 1156 + 807 = $3,808 Mil.
Total Current Assets was $26,226 Mil.
Total Assets was $41,444 Mil.
Property, Plant and Equipment(Net PPE) was $10,102 Mil.
Depreciation, Depletion and Amortization(DDA) was $901 Mil.
Selling, General & Admin. Expense(SGA) was $1,716 Mil.
Total Current Liabilities was $13,456 Mil.
Long-Term Debt was $5,353 Mil.
Net Income was 267 + 374 + 476 + 223 = $1,340 Mil.
Non Operating Income was 155 + -607 + 75 + 40 = $-337 Mil.
Cash Flow from Operations was -358 + 357 + 2521 + 1991 = $4,511 Mil.
|Accounts Receivable was $3,553 Mil.
Revenue was 21727 + 0 + 21808 + 22675 = $66,210 Mil.
Gross Profit was 756 + 0 + 806 + 813 = $2,375 Mil.
Total Current Assets was $27,865 Mil.
Total Assets was $43,226 Mil.
Property, Plant and Equipment(Net PPE) was $10,122 Mil.
Depreciation, Depletion and Amortization(DDA) was $882 Mil.
Selling, General & Admin. Expense(SGA) was $1,220 Mil.
Total Current Liabilities was $16,142 Mil.
Long-Term Debt was $5,374 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)|
|=||(5244 / 88773)||/||(3553 / 66210)|
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)|
|=||(1170 / 66210)||/||(675 / 88773)|
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 - (26226 + 10102) / 41444)||/||(1 - (27865 + 10122) / 43226)|
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 + 10122))||/||(901 / (901 + 10102))|
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)|
|=||(1716 / 88773)||/||(1220 / 66210)|
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)|
|=||((5353 + 13456) / 41444)||/||((5374 + 16142) / 43226)|
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|
|=||(1340 - -337||-||4511)||/||41444|
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 -2.46 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