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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 -2.44. The lowest was -3.01. And the median was -2.74.
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 * 0.9384||+||0.528 * 0.9903||+||0.404 * 0.9145||+||0.892 * 1.0254||+||0.115 * 1.0062|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9537||+||4.679 * -0.0757||-||0.327 * 0.9438|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $1,486 Mil.|
Revenue was 2677 + 2634.6 + 2581.9 + 2545.5 = $10,439 Mil.
Gross Profit was 744.6 + 715.9 + 664.3 + 679.6 = $2,804 Mil.
Total Current Assets was $3,295 Mil.
Total Assets was $17,779 Mil.
Property, Plant and Equipment(Net PPE) was $9,532 Mil.
Depreciation, Depletion and Amortization(DDA) was $957 Mil.
Selling, General & Admin. Expense(SGA) was $1,065 Mil.
Total Current Liabilities was $2,963 Mil.
Long-Term Debt was $4,825 Mil.
Net Income was 104 + 314 + 283.5 + 290.2 = $992 Mil.
Non Operating Income was 39.7 + 43.1 + 30.4 + 38.2 = $151 Mil.
Cash Flow from Operations was 602.4 + 559.3 + 477.8 + 546.9 = $2,186 Mil.
|Accounts Receivable was $1,544 Mil.
Revenue was 2586.5 + 2547.3 + 2484.2 + 2562.4 = $10,180 Mil.
Gross Profit was 703.6 + 671.8 + 670.6 + 662.3 = $2,708 Mil.
Total Current Assets was $3,439 Mil.
Total Assets was $17,850 Mil.
Property, Plant and Equipment(Net PPE) was $8,974 Mil.
Depreciation, Depletion and Amortization(DDA) was $907 Mil.
Selling, General & Admin. Expense(SGA) was $1,089 Mil.
Total Current Liabilities was $3,228 Mil.
Long-Term Debt was $5,056 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)|
|=||(1486 / 10439)||/||(1544.3 / 10180.4)|
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)|
|=||(715.9 / 10180.4)||/||(744.6 / 10439)|
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 - (3294.8 + 9532.1) / 17779.1)||/||(1 - (3439.1 + 8974) / 17850.1)|
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))|
|=||(907 / (907 + 8974))||/||(956.9 / (956.9 + 9532.1))|
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)|
|=||(1064.8 / 10439)||/||(1088.8 / 10180.4)|
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)|
|=||((4824.5 + 2963) / 17779.1)||/||((5056.3 + 3227.6) / 17850.1)|
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|
|=||(991.7 - 151.4||-||2186.4)||/||17779.1|
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 -2.88 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