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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.
Air Products & Chemicals Inc has a M-score of -2.80 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Air Products & Chemicals Inc was -2.43. The lowest was -3.14. And the median was -2.70.
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 * 0.983||+||0.528 * 0.9867||+||0.404 * 0.9643||+||0.892 * 1.0146||+||0.115 * 1.0525|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0276||+||4.679 * -0.0663||-||0.327 * 0.967|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $2,039 Mil.|
Revenue was 2634.6 + 2581.9 + 2545.5 + 2586.5 = $10,349 Mil.
Gross Profit was 715.9 + 664.3 + 679.6 + 703.6 = $2,763 Mil.
Total Current Assets was $3,340 Mil.
Total Assets was $18,316 Mil.
Property, Plant and Equipment(Net PPE) was $9,579 Mil.
Depreciation, Depletion and Amortization(DDA) was $935 Mil.
Selling, General & Admin. Expense(SGA) was $1,099 Mil.
Total Current Liabilities was $3,156 Mil.
Long-Term Debt was $4,951 Mil.
Net Income was 314 + 283.5 + 290.2 + 137.1 = $1,025 Mil.
Non Operating Income was 43.1 + 30.4 + 38.2 + 42.4 = $154 Mil.
Cash Flow from Operations was 559.3 + 477.8 + 546.9 + 501.9 = $2,086 Mil.
|Accounts Receivable was $2,044 Mil.
Revenue was 2547.3 + 2484.2 + 2562.4 + 2605.8 = $10,200 Mil.
Gross Profit was 671.8 + 670.6 + 662.3 + 682.8 = $2,688 Mil.
Total Current Assets was $3,481 Mil.
Total Assets was $17,491 Mil.
Property, Plant and Equipment(Net PPE) was $8,666 Mil.
Depreciation, Depletion and Amortization(DDA) was $895 Mil.
Selling, General & Admin. Expense(SGA) was $1,054 Mil.
Total Current Liabilities was $3,358 Mil.
Long-Term Debt was $4,648 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)|
|=||(2038.9 / 10348.5)||/||(2044.3 / 10199.7)|
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)|
|=||(664.3 / 10199.7)||/||(715.9 / 10348.5)|
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 - (3339.8 + 9579.1) / 18316.2)||/||(1 - (3480.7 + 8665.7) / 17491.3)|
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))|
|=||(894.7 / (894.7 + 8665.7))||/||(934.9 / (934.9 + 9579.1))|
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)|
|=||(1099 / 10348.5)||/||(1054.1 / 10199.7)|
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)|
|=||((4951 + 3156.1) / 18316.2)||/||((4648.2 + 3357.7) / 17491.3)|
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|
|=||(1024.8 - 154.1||-||2085.9)||/||18316.2|
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 -2.80 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