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Archer-Daniels Midland Company (NYSE:ADM)
Beneish M-Score
-2.94 (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 Company has a M-score of -2.88 suggests that the company is not a manipulator.

ADM' s 10-Year Beneish M-Score Range
Min: -3.39   Max: -1.22
Current: -2.94

-3.39
-1.22

During the past 13 years, the highest Beneish M-Score of Archer-Daniels Midland Company was -1.22. The lowest was -3.39. And the median was -2.49.


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 Company 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 * 1.0633+0.528 * 0.8931+0.404 * 1.1015+0.892 * 1.0097+0.115 * 0.9707
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0828+4.679 * -0.0994-0.327 * 0.8913
=-2.88

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

This Year (Dec13) TTM:Last Year (Sep12) TTM:
Accounts Receivable was $3,224 Mil.
Revenue was 24143 + 21393 + 22541 + 21727 = $89,804 Mil.
Gross Profit was 1170 + 1156 + 807 + 756 = $3,889 Mil.
Total Current Assets was $28,530 Mil.
Total Assets was $43,752 Mil.
Property, Plant and Equipment(Net PPE) was $10,137 Mil.
Depreciation, Depletion and Amortization(DDA) was $909 Mil.
Selling, General & Admin. Expense(SGA) was $1,759 Mil.
Total Current Liabilities was $15,658 Mil.
Long-Term Debt was $5,347 Mil.
Net Income was 374 + 476 + 223 + 269 = $1,342 Mil.
Non Operating Income was 215 + 75 + 40 + 134 = $464 Mil.
Cash Flow from Operations was 357 + 2521 + 1991 + 357 = $5,226 Mil.
Accounts Receivable was $3,003 Mil.
Revenue was 21808 + 22675 + 21155 + 23306 = $88,944 Mil.
Gross Profit was 806 + 813 + 1008 + 813 = $3,440 Mil.
Total Current Assets was $30,154 Mil.
Total Assets was $44,760 Mil.
Property, Plant and Equipment(Net PPE) was $9,883 Mil.
Depreciation, Depletion and Amortization(DDA) was $858 Mil.
Selling, General & Admin. Expense(SGA) was $1,609 Mil.
Total Current Liabilities was $17,562 Mil.
Long-Term Debt was $6,547 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)
=(3224 / 89804) / (3003 / 88944)
=0.03590041 / 0.03376282
=1.0633

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)
=(1156 / 88944) / (1170 / 89804)
=0.03867602 / 0.04330542
=0.8931

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 - (28530 + 10137) / 43752) / (1 - (30154 + 9883) / 44760)
=0.11622326 / 0.10551832
=1.1015

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
=89804 / 88944
=1.0097

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))
=(858 / (858 + 9883)) / (909 / (909 + 10137))
=0.07988083 / 0.08229223
=0.9707

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)
=(1759 / 89804) / (1609 / 88944)
=0.0195871 / 0.01809003
=1.0828

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)
=((5347 + 15658) / 43752) / ((6547 + 17562) / 44760)
=0.48009234 / 0.53862824
=0.8913

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
=(1342 - 464 - 5226) / 43752
=-0.0994

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 Company has a M-score of -2.88 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 Company Annual Data

Jun04Jun05Jun06Jun07Jun08Jun09Jun10Jun11Jun12Dec13
DSRI 1.03371.0211.07061.19081.13050.64230.93950.60050.64810.9295
GMI 0.94650.87860.83461.1021.33630.93140.94831.16891.29380.9513
AQI 1.01721.02160.97990.81340.76121.10731.10530.85420.94890.97
SGI 1.17730.99421.01821.20281.58610.99130.89131.30791.10361.0086
DEPI 0.91381.02071.03011.05671.13671.02850.94281.12131.06240.9667
SGAI 1.25650.77561.08360.8330.74871.00381.11090.88110.91451.0726
LVGI 1.03180.88331.0041.04611.19840.86650.94381.03020.99870.9477
TATA 0.0076-0.0847-0.0240.02070.1168-0.125-0.03740.0875-0.0517-0.0994
M-score -2.34-2.84-2.62-2.03-1.22-3.35-2.80-2.11-2.80-3.04

Archer-Daniels Midland Company Quarterly Data

Jun11Sep11Dec11Mar12Jun12Sep12Mar13Jun13Sep13Dec13
DSRI 0.60050.9370.37290.24320.64810.28020.70391.14981.02031.0633
GMI 1.16891.09671.20851.26761.29381.36421.20251.23561.02220.8931
AQI 0.85420.77840.95170.97450.94890.96891.07261.09781.05371.1015
SGI 1.30791.34961.28551.21391.10361.03690.9910.99460.98241.0097
DEPI 1.12131.22051.17281.12051.06240.99320.99470.97310.97650.9707
SGAI 0.88110.85120.86680.89750.91450.94790.99311.01581.06861.0828
LVGI 1.03020.96460.88960.88480.99871.05520.95710.90140.91040.8913
TATA 0.08750.0213-0.0925-0.0938-0.0517-0.0185-0.0005-0.0714-0.1098-0.0994
M-score -2.11-2.10-3.07-3.22-2.80-3.03-2.61-2.49-2.94-2.88
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