Switch to:
A O Smith Corp (NYSE:AOS)
Beneish M-Score
-2.60 (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.

A O Smith Corp has a M-score of -2.60 suggests that the company is not a manipulator.

AOS' s 10-Year Beneish M-Score Range
Min: -4.5   Max: 3.08
Current: -2.6

-4.5
3.08

During the past 13 years, the highest Beneish M-Score of A O Smith Corp was 3.08. The lowest was -4.50. And the median was -2.50.


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 A O Smith 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 * 0.9862+0.528 * 0.976+0.404 * 0.9031+0.892 * 1.0966+0.115 * 1.067
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0116+4.679 * -0.0269-0.327 * 1.0747
=-2.60

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $457 Mil.
Revenue was 595.4 + 552.2 + 558.9 + 536.2 = $2,243 Mil.
Gross Profit was 216.2 + 195.9 + 199.9 + 196.6 = $809 Mil.
Total Current Assets was $1,234 Mil.
Total Assets was $2,431 Mil.
Property, Plant and Equipment(Net PPE) was $417 Mil.
Depreciation, Depletion and Amortization(DDA) was $61 Mil.
Selling, General & Admin. Expense(SGA) was $541 Mil.
Total Current Liabilities was $550 Mil.
Long-Term Debt was $236 Mil.
Net Income was 57.3 + 46.7 + 42.4 + 46.2 = $193 Mil.
Non Operating Income was 1.2 + 1.3 + -10 + 1.1 = $-6 Mil.
Cash Flow from Operations was 78 + 11.8 + 91.6 + 83 = $264 Mil.
Accounts Receivable was $423 Mil.
Revenue was 549.1 + 509.6 + 524.3 + 462.2 = $2,045 Mil.
Gross Profit was 198 + 179.3 + 185.6 + 156.8 = $720 Mil.
Total Current Assets was $1,126 Mil.
Total Assets was $2,295 Mil.
Property, Plant and Equipment(Net PPE) was $354 Mil.
Depreciation, Depletion and Amortization(DDA) was $56 Mil.
Selling, General & Admin. Expense(SGA) was $488 Mil.
Total Current Liabilities was $490 Mil.
Long-Term Debt was $201 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)
=(457 / 2242.7) / (422.6 / 2045.2)
=0.20377224 / 0.20663016
=0.9862

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)
=(195.9 / 2045.2) / (216.2 / 2242.7)
=0.35189712 / 0.36054755
=0.976

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 - (1233.9 + 416.5) / 2430.7) / (1 - (1125.6 + 353.7) / 2295.2)
=0.32101864 / 0.355481
=0.9031

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
=2242.7 / 2045.2
=1.0966

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))
=(56.1 / (56.1 + 353.7)) / (61.3 / (61.3 + 416.5))
=0.13689605 / 0.12829636
=1.067

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)
=(541.2 / 2242.7) / (487.9 / 2045.2)
=0.24131627 / 0.23855858
=1.0116

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)
=((236.2 + 550) / 2430.7) / ((200.7 + 490.1) / 2295.2)
=0.32344592 / 0.30097595
=1.0747

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
=(192.6 - -6.4 - 264.4) / 2430.7
=-0.0269

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.

A O Smith Corp has a M-score of -2.60 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 own currency.

A O Smith Corp Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.10160.96891.06161.02460.87841.18951.12141.02381.01850.9709
GMI 1.08250.86510.97090.96661.02870.85850.83950.99930.89140.9358
AQI 0.96320.99021.27451.01191.0111.08551.1510.77461.0210.9265
SGI 1.081.02181.27951.06980.99690.8640.74781.14851.13381.1106
DEPI 0.97111.01341.03290.90311.0110.97131.03171.05120.95111.0304
SGAI 1.05891.0451.00571.04730.98761.18721.1990.98751.06591.0483
LVGI 0.99220.9221.29960.97260.94980.87170.96971.11110.77981.0054
TATA -0.0229-0.107-0.0349-0.0557-0.014-0.0964-0.0060.0967-0.01-0.0429
M-score -2.40-3.05-2.34-2.68-2.62-2.91-2.67-1.99-2.38-2.68

A O Smith Corp Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.97910.77160.56461.01850.8350.99381.05390.97090.96950.9862
GMI 1.02040.99121.00110.89140.8810.90060.9170.93580.95730.976
AQI 0.84480.89721.04651.0210.98250.95890.94740.92650.91170.9031
SGI 1.27351.51351.76931.13381.12411.11121.12081.11061.10911.0966
DEPI 0.87110.73830.53260.95110.97411.00171.06771.03041.05561.067
SGAI 0.95251.01950.94651.06591.06441.06421.05381.04831.03771.0116
LVGI 0.89780.79450.76680.77980.84990.90930.98421.00541.03781.0747
TATA 0.06830.0457-0.0404-0.01-0.0176-0.0403-0.0378-0.0412-0.0292-0.0269
M-score -1.96-2.03-2.33-2.38-2.64-2.63-2.56-2.67-2.62-2.60
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK