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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 -2.02. The lowest was -3.62. 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 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 * 0.9994||+||0.528 * 1.0598||+||0.404 * 1.0887||+||0.892 * 0.8484||+||0.115 * 0.861|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0068||+||4.679 * -0.0405||-||0.327 * 1.0563|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|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.
Net Income was 30.1 + 77.6 + 65 + 168.2 = $341 Mil.
Non Operating Income was 9.8 + -14.9 + -10.1 + -12.9 = $-28 Mil.
Cash Flow from Operations was -286 + 653.7 + 38.9 + 256.8 = $663 Mil.
|Accounts Receivable was $1,211 Mil.
Revenue was 2333.4 + 2859.7 + 2475.9 + 3048.2 = $10,717 Mil.
Gross Profit was 514.9 + 591 + 556.2 + 710.3 = $2,372 Mil.
Total Current Assets was $4,397 Mil.
Total Assets was $8,320 Mil.
Property, Plant and Equipment(Net PPE) was $1,603 Mil.
Depreciation, Depletion and Amortization(DDA) was $266 Mil.
Selling, General & Admin. Expense(SGA) was $1,100 Mil.
Total Current Liabilities was $2,786 Mil.
Long-Term Debt was $1,014 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)|
|=||(1027.1 / 9092.9)||/||(1211.3 / 10717.2)|
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)|
|=||(498 / 10717.2)||/||(347.9 / 9092.9)|
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 - (3669.8 + 1389.5) / 7264.5)||/||(1 - (4396.9 + 1603) / 8319.7)|
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))|
|=||(266.4 / (266.4 + 1603))||/||(275.6 / (275.6 + 1389.5))|
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)|
|=||(939.6 / 9092.9)||/||(1100 / 10717.2)|
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)|
|=||((1424.5 + 2080.8) / 7264.5)||/||((1014.3 + 2786.3) / 8319.7)|
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|
|=||(340.9 - -28.1||-||663.4)||/||7264.5|
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 -2.77 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