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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 -2.52.
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 * 1.1868||+||0.528 * 1.216||+||0.404 * 1.1802||+||0.892 * 0.8551||+||0.115 * 1.0014|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1013||+||4.679 * -0.0171||-||0.327 * 1.0394|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $2,257 Mil.|
Revenue was 15629 + 14384 + 16445 + 16565 = $63,023 Mil.
Gross Profit was 757 + 796 + 865 + 1089 = $3,507 Mil.
Total Current Assets was $20,867 Mil.
Total Assets was $40,098 Mil.
Property, Plant and Equipment(Net PPE) was $9,802 Mil.
Depreciation, Depletion and Amortization(DDA) was $893 Mil.
Selling, General & Admin. Expense(SGA) was $1,988 Mil.
Total Current Liabilities was $13,778 Mil.
Long-Term Debt was $5,561 Mil.
Net Income was 284 + 230 + 718 + 252 = $1,484 Mil.
Non Operating Income was 212 + 33 + 372 + -155 = $462 Mil.
Cash Flow from Operations was -389 + 23 + 1383 + 691 = $1,708 Mil.
|Accounts Receivable was $2,224 Mil.
Revenue was 17186 + 17506 + 20894 + 18117 = $73,703 Mil.
Gross Profit was 964 + 1102 + 1451 + 1470 = $4,987 Mil.
Total Current Assets was $22,588 Mil.
Total Assets was $40,568 Mil.
Property, Plant and Equipment(Net PPE) was $9,897 Mil.
Depreciation, Depletion and Amortization(DDA) was $903 Mil.
Selling, General & Admin. Expense(SGA) was $2,111 Mil.
Total Current Liabilities was $12,859 Mil.
Long-Term Debt was $5,965 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)|
|=||(2257 / 63023)||/||(2224 / 73703)|
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)|
|=||(4987 / 73703)||/||(3507 / 63023)|
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 - (20867 + 9802) / 40098)||/||(1 - (22588 + 9897) / 40568)|
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))|
|=||(903 / (903 + 9897))||/||(893 / (893 + 9802))|
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)|
|=||(1988 / 63023)||/||(2111 / 73703)|
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)|
|=||((5561 + 13778) / 40098)||/||((5965 + 12859) / 40568)|
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|
|=||(1484 - 462||-||1708)||/||40098|
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 -2.36 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