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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 Assa Abloy AB was -2.21. The lowest was -3.15. And the median was -2.44.
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 Assa Abloy AB 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 * 1.0285||+||0.528 * 0.9933||+||0.404 * 1.0023||+||0.892 * 1.0247||+||0.115 * 0.9083|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9938||+||4.679 * -0.0024||-||0.327 * 0.9951|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $1,406 Mil.|
Revenue was 1905.53277214 + 2154.51270338 + 2087.64149703 + 2066.71264201 = $8,214 Mil.
Gross Profit was 754.850468859 + 829.54625727 + 807.803105464 + 801.301828125 = $3,194 Mil.
Total Current Assets was $2,938 Mil.
Total Assets was $10,528 Mil.
Property, Plant and Equipment(Net PPE) was $918 Mil.
Depreciation, Depletion and Amortization(DDA) was $177 Mil.
Selling, General & Admin. Expense(SGA) was $1,648 Mil.
Total Current Liabilities was $2,583 Mil.
Long-Term Debt was $1,879 Mil.
Net Income was 196.417008418 + 249.593821376 + 247.313498847 + 228.424860562 = $922 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was -66.4316377677 + 442.675834138 + 342.222594102 + 228.182885074 = $947 Mil.
|Accounts Receivable was $1,334 Mil.
Revenue was 1784.94522985 + 2077.23262856 + 2065.43995961 + 2088.57446268 = $8,016 Mil.
Gross Profit was 698.553506226 + 796.314016437 + 797.873832431 + 802.883680582 = $3,096 Mil.
Total Current Assets was $2,790 Mil.
Total Assets was $10,165 Mil.
Property, Plant and Equipment(Net PPE) was $948 Mil.
Depreciation, Depletion and Amortization(DDA) was $163 Mil.
Selling, General & Admin. Expense(SGA) was $1,619 Mil.
Total Current Liabilities was $2,398 Mil.
Long-Term Debt was $1,931 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)|
|=||(1405.97644915 / 8214.39961456)||/||(1334.02771276 / 8016.19228069)|
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)|
|=||(3095.62503568 / 8016.19228069)||/||(3193.50165972 / 8214.39961456)|
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 - (2938.34088783 + 918.171571096) / 10528.4552846)||/||(1 - (2790.4690572 + 947.944948975) / 10165.1296695)|
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))|
|=||(162.820472067 / (162.820472067 + 947.944948975))||/||(176.694144309 / (176.694144309 + 918.171571096))|
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)|
|=||(1648.33256966 / 8214.39961456)||/||(1618.63216381 / 8016.19228069)|
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)|
|=||((1878.79223925 + 2583.15945991) / 10528.4552846)||/||((1930.64787941 + 2398.41775115) / 10165.1296695)|
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|
|=||(921.749189202 - 0||-||946.649675546)||/||10528.4552846|
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.
Assa Abloy AB has a M-score of -2.45 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
Assa Abloy AB Annual Data
Assa Abloy AB Quarterly Data