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GuruFocus has detected 6 Warning Signs with AGCO Corp $AGCO.
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AGCO Corp (NYSE:AGCO)
Beneish M-Score
-2.57 (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.

AGCO Corp has a M-score of -2.57 suggests that the company is not a manipulator.

AGCO' s Beneish M-Score Range Over the Past 10 Years
Min: -3.01   Max: -0.54
Current: -2.57

-3.01
-0.54

During the past 13 years, the highest Beneish M-Score of AGCO Corp was -0.54. The lowest was -3.01. And the median was -2.55.


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 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 * 1.0722+0.528 * 1.0219+0.404 * 1.063+0.892 * 0.9924+0.115 * 0.9641
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0261+4.679 * -0.0311-0.327 * 1.0942
=-2.57

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $890 Mil.
Revenue was 2094 + 1761.6 + 1995.6 + 1559.3 = $7,411 Mil.
Gross Profit was 420.3 + 353.5 + 427 + 314.7 = $1,516 Mil.
Total Current Assets was $3,166 Mil.
Total Assets was $7,168 Mil.
Property, Plant and Equipment(Net PPE) was $1,361 Mil.
Depreciation, Depletion and Amortization(DDA) was $275 Mil.
Selling, General & Admin. Expense(SGA) was $868 Mil.
Total Current Liabilities was $2,145 Mil.
Long-Term Debt was $1,610 Mil.
Net Income was 62 + 40 + 50.3 + 7.8 = $160 Mil.
Non Operating Income was 64.7 + -24 + -16 + -11.3 = $13 Mil.
Cash Flow from Operations was 496.9 + -62.8 + 283.6 + -348.2 = $370 Mil.
Accounts Receivable was $837 Mil.
Revenue was 1959 + 1736.4 + 2069.3 + 1702.6 = $7,467 Mil.
Gross Profit was 397.4 + 365.7 + 449.6 + 347.9 = $1,561 Mil.
Total Current Assets was $2,898 Mil.
Total Assets was $6,498 Mil.
Property, Plant and Equipment(Net PPE) was $1,347 Mil.
Depreciation, Depletion and Amortization(DDA) was $260 Mil.
Selling, General & Admin. Expense(SGA) was $852 Mil.
Total Current Liabilities was $2,185 Mil.
Long-Term Debt was $925 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)
=(890.4 / 7410.5) / (836.8 / 7467.3)
=0.12015384 / 0.11206192
=1.0722

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)
=(1560.6 / 7467.3) / (1515.5 / 7410.5)
=0.2089912 / 0.20450712
=1.0219

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 - (3165.7 + 1361.3) / 7168.4) / (1 - (2898.3 + 1347.1) / 6497.7)
=0.36847832 / 0.34663035
=1.063

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
=7410.5 / 7467.3
=0.9924

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))
=(260.1 / (260.1 + 1347.1)) / (274.6 / (274.6 + 1361.3))
=0.16183425 / 0.16785867
=0.9641

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)
=(867.9 / 7410.5) / (852.3 / 7467.3)
=0.1171176 / 0.11413764
=1.0261

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)
=((1610 + 2144.9) / 7168.4) / ((925.2 + 2185.4) / 6497.7)
=0.52381285 / 0.47872324
=1.0942

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
=(160.1 - 13.4 - 369.5) / 7168.4
=-0.0311

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 -2.57 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 local exchange's currency.

AGCO Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.9010.86251.14951.18370.83970.8390.93951.13671.13061.0722
GMI 0.97870.97981.08220.90130.90150.94990.96171.04291.01681.0219
AQI 0.97130.83791.1670.95421.27730.93560.89891.24811.01051.063
SGI 1.25631.23380.77351.05831.27211.13551.08280.90140.76790.9924
DEPI 1.0570.98431.17070.91391.15060.88441.00850.89980.95680.9641
SGAI 0.91940.93381.131.03780.98741.05480.96571.01431.1151.0261
LVGI 0.92831.05810.80821.02041.14960.910.98040.98151.09741.0942
TATA -0.04480.0231-0.038-0.0372-0.017-0.0142-0.01890.0029-0.0341-0.0248
M-score -2.53-2.38-2.55-2.53-2.43-2.62-2.60-2.31-2.77-2.54

AGCO Corp Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.96481.13670.99941.05161.10371.13061.13931.04811.2251.0722
GMI 1.02391.04291.05981.07821.02891.01681.00160.98371.0131.0219
AQI 1.04671.24811.08871.10121.06381.01051.12531.10671.15591.063
SGI 0.94990.90140.84840.80730.79160.76790.80550.86190.91020.9924
DEPI 0.94720.89980.8610.90670.9570.95681.03730.98211.00240.9641
SGAI 1.02171.01431.00681.01871.0561.1151.12621.11671.08711.0261
LVGI 1.01440.98151.05631.07931.06851.09741.04591.04581.09891.0942
TATA 0.02070.0109-0.0335-0.0531-0.0552-0.0407-0.032-0.0346-0.021-0.0311
M-score -2.44-2.28-2.74-2.81-2.82-2.80-2.66-2.72-2.43-2.57
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