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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 Air Products & Chemicals Inc was -2.40. The lowest was -3.22. And the median was -2.72.
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 Air Products & Chemicals Inc 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 * 0.8539||+||0.528 * 0.9384||+||0.404 * 0.939||+||0.892 * 1.0025||+||0.115 * 0.9815|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9375||+||4.679 * -0.0717||-||0.327 * 0.9621|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $1,381 Mil.|
Revenue was 2414.5 + 2560.8 + 2677 + 2634.6 = $10,287 Mil.
Gross Profit was 714.9 + 729.8 + 744.6 + 715.9 = $2,905 Mil.
Total Current Assets was $3,115 Mil.
Total Assets was $17,494 Mil.
Property, Plant and Equipment(Net PPE) was $9,486 Mil.
Depreciation, Depletion and Amortization(DDA) was $962 Mil.
Selling, General & Admin. Expense(SGA) was $1,032 Mil.
Total Current Liabilities was $3,081 Mil.
Long-Term Debt was $4,512 Mil.
Net Income was 290 + 324.6 + 104 + 314 = $1,033 Mil.
Non Operating Income was 33 + 43.1 + 39.7 + 43.1 = $159 Mil.
Cash Flow from Operations was 480.6 + 486.6 + 602.4 + 558.6 = $2,128 Mil.
|Accounts Receivable was $1,614 Mil.
Revenue was 2581.9 + 2545.5 + 2586.5 + 2547.3 = $10,261 Mil.
Gross Profit was 664.3 + 679.6 + 703.6 + 671.8 = $2,719 Mil.
Total Current Assets was $3,300 Mil.
Total Assets was $17,963 Mil.
Property, Plant and Equipment(Net PPE) was $9,312 Mil.
Depreciation, Depletion and Amortization(DDA) was $926 Mil.
Selling, General & Admin. Expense(SGA) was $1,098 Mil.
Total Current Liabilities was $3,110 Mil.
Long-Term Debt was $4,993 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)|
|=||(1381.4 / 10286.9)||/||(1613.7 / 10261.2)|
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)|
|=||(729.8 / 10261.2)||/||(714.9 / 10286.9)|
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 - (3114.5 + 9485.9) / 17493.8)||/||(1 - (3299.9 + 9312.3) / 17963)|
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))|
|=||(925.6 / (925.6 + 9312.3))||/||(962.4 / (962.4 + 9485.9))|
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)|
|=||(1032.2 / 10286.9)||/||(1098.3 / 10261.2)|
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)|
|=||((4511.5 + 3081.3) / 17493.8)||/||((4993.2 + 3110.3) / 17963)|
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|
|=||(1032.6 - 158.9||-||2128.2)||/||17493.8|
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.
Air Products & Chemicals Inc has a M-score of -2.98 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
Air Products & Chemicals Inc Annual Data
Air Products & Chemicals Inc Quarterly Data