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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 -2.01. The lowest was -3.61. And the median was -2.54.
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 * 1.1393||+||0.528 * 1.0016||+||0.404 * 1.1253||+||0.892 * 0.8055||+||0.115 * 1.0373|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1262||+||4.679 * -0.0226||-||0.327 * 1.0459|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $943 Mil.|
Revenue was 1559.3 + 1959 + 1736.4 + 2069.3 = $7,324 Mil.
Gross Profit was 314.7 + 397.4 + 365.7 + 449.6 = $1,527 Mil.
Total Current Assets was $3,213 Mil.
Total Assets was $6,976 Mil.
Property, Plant and Equipment(Net PPE) was $1,380 Mil.
Depreciation, Depletion and Amortization(DDA) was $262 Mil.
Selling, General & Admin. Expense(SGA) was $852 Mil.
Total Current Liabilities was $2,263 Mil.
Long-Term Debt was $1,258 Mil.
Net Income was 7.8 + 62.1 + 67.1 + 107.1 = $244 Mil.
Non Operating Income was -11.3 + -19.1 + 2.1 + -32.1 = $-60 Mil.
Cash Flow from Operations was -348.2 + 452 + 44.2 + 314 = $462 Mil.
|Accounts Receivable was $1,027 Mil.
Revenue was 1702.6 + 2485.2 + 2154.8 + 2750.3 = $9,093 Mil.
Gross Profit was 347.9 + 498 + 421.9 + 631.5 = $1,899 Mil.
Total Current Assets was $3,670 Mil.
Total Assets was $7,265 Mil.
Property, Plant and Equipment(Net PPE) was $1,390 Mil.
Depreciation, Depletion and Amortization(DDA) was $276 Mil.
Selling, General & Admin. Expense(SGA) was $940 Mil.
Total Current Liabilities was $2,081 Mil.
Long-Term Debt was $1,425 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)|
|=||(942.5 / 7324)||/||(1027.1 / 9092.9)|
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)|
|=||(397.4 / 9092.9)||/||(314.7 / 7324)|
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 - (3213.1 + 1380) / 6976.2)||/||(1 - (3669.8 + 1389.5) / 7264.5)|
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))|
|=||(275.6 / (275.6 + 1389.5))||/||(262 / (262 + 1380))|
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)|
|=||(852.3 / 7324)||/||(939.6 / 9092.9)|
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)|
|=||((1257.5 + 2263.3) / 6976.2)||/||((1424.5 + 2080.8) / 7264.5)|
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|
|=||(244.1 - -60.4||-||462)||/||6976.2|
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 -2.61 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