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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 -2.54.
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 * 1.225||+||0.528 * 1.013||+||0.404 * 1.1559||+||0.892 * 0.9102||+||0.115 * 1.0024|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0871||+||4.679 * -0.021||-||0.327 * 1.0989|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $1,056 Mil.|
Revenue was 1761.6 + 1995.6 + 1559.3 + 1959 = $7,276 Mil.
Gross Profit was 353.5 + 427 + 314.7 + 397.4 = $1,493 Mil.
Total Current Assets was $3,429 Mil.
Total Assets was $7,541 Mil.
Property, Plant and Equipment(Net PPE) was $1,388 Mil.
Depreciation, Depletion and Amortization(DDA) was $268 Mil.
Selling, General & Admin. Expense(SGA) was $865 Mil.
Total Current Liabilities was $2,158 Mil.
Long-Term Debt was $1,876 Mil.
Net Income was 40 + 50.3 + 7.8 + 62.1 = $160 Mil.
Non Operating Income was -24 + -16 + -11.3 + 45.1 = $-6 Mil.
Cash Flow from Operations was -62.8 + 283.6 + -348.2 + 452 = $325 Mil.
|Accounts Receivable was $947 Mil.
Revenue was 1736.4 + 2069.3 + 1702.6 + 2485.2 = $7,994 Mil.
Gross Profit was 365.7 + 449.6 + 347.9 + 498 = $1,661 Mil.
Total Current Assets was $3,501 Mil.
Total Assets was $7,072 Mil.
Property, Plant and Equipment(Net PPE) was $1,362 Mil.
Depreciation, Depletion and Amortization(DDA) was $264 Mil.
Selling, General & Admin. Expense(SGA) was $875 Mil.
Total Current Liabilities was $2,212 Mil.
Long-Term Debt was $1,230 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)|
|=||(1055.5 / 7275.5)||/||(946.7 / 7993.5)|
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)|
|=||(1661.2 / 7993.5)||/||(1492.6 / 7275.5)|
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 - (3429.1 + 1388.2) / 7541)||/||(1 - (3500.5 + 1361.5) / 7071.6)|
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))|
|=||(263.8 / (263.8 + 1361.5))||/||(268.2 / (268.2 + 1388.2))|
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)|
|=||(865.3 / 7275.5)||/||(874.5 / 7993.5)|
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)|
|=||((1875.8 + 2158) / 7541)||/||((1230.2 + 2212.2) / 7071.6)|
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|
|=||(160.2 - -6.2||-||324.6)||/||7541|
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 -2.43 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