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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 AGCO Corp was -2.07. The lowest was -3.01. And the median was -2.55.
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 AGCO Corp 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 * 1.1367||+||0.528 * 1.0429||+||0.404 * 1.15||+||0.892 * 0.9014||+||0.115 * 0.8998|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0143||+||4.679 * 0.0029||-||0.327 * 0.9779|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $964 Mil.|
Revenue was 2485.2 + 2154.8 + 2750.3 + 2333.4 = $9,724 Mil.
Gross Profit was 498 + 421.9 + 631.5 + 514.9 = $2,066 Mil.
Total Current Assets was $3,528 Mil.
Total Assets was $7,396 Mil.
Property, Plant and Equipment(Net PPE) was $1,530 Mil.
Depreciation, Depletion and Amortization(DDA) was $280 Mil.
Selling, General & Admin. Expense(SGA) was $995 Mil.
Total Current Liabilities was $2,217 Mil.
Long-Term Debt was $998 Mil.
Net Income was 77.6 + 65 + 168.2 + 99.6 = $410 Mil.
Non Operating Income was -14.9 + -10.1 + -12.9 + -11.2 = $-49 Mil.
Cash Flow from Operations was 653.7 + 38.9 + 256.8 + -511 = $438 Mil.
|Accounts Receivable was $941 Mil.
Revenue was 2859.7 + 2475.9 + 3048.2 + 2403.1 = $10,787 Mil.
Gross Profit was 591 + 556.2 + 710.3 + 533.1 = $2,391 Mil.
Total Current Assets was $4,517 Mil.
Total Assets was $8,439 Mil.
Property, Plant and Equipment(Net PPE) was $1,602 Mil.
Depreciation, Depletion and Amortization(DDA) was $259 Mil.
Selling, General & Admin. Expense(SGA) was $1,089 Mil.
Total Current Liabilities was $2,812 Mil.
Long-Term Debt was $939 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)|
|=||(963.8 / 9723.7)||/||(940.6 / 10786.9)|
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)|
|=||(421.9 / 10786.9)||/||(498 / 9723.7)|
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 - (3527.9 + 1530.4) / 7395.9)||/||(1 - (4517.1 + 1602.3) / 8438.8)|
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))|
|=||(259.4 / (259.4 + 1602.3))||/||(280.4 / (280.4 + 1530.4))|
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)|
|=||(995.4 / 9723.7)||/||(1088.7 / 10786.9)|
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)|
|=||((997.6 + 2216.9) / 7395.9)||/||((938.5 + 2812) / 8438.8)|
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|
|=||(410.4 - -49.1||-||438.4)||/||7395.9|
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.
AGCO Corp has a M-score of -2.35 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
AGCO Corp Annual Data
AGCO Corp Quarterly Data