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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 -2.45.
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 * 1.0142||+||0.528 * 0.9714||+||0.404 * 1.0073||+||0.892 * 1.0114||+||0.115 * 0.8932|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9803||+||4.679 * -0.0033||-||0.327 * 0.938|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $1,438 Mil.|
Revenue was 2066.71264201 + 1784.94522985 + 2077.23262856 + 2065.43995961 = $7,994 Mil.
Gross Profit was 801.301828125 + 698.553506226 + 796.314016437 + 797.873832431 = $3,094 Mil.
Total Current Assets was $2,950 Mil.
Total Assets was $10,424 Mil.
Property, Plant and Equipment(Net PPE) was $910 Mil.
Depreciation, Depletion and Amortization(DDA) was $165 Mil.
Selling, General & Admin. Expense(SGA) was $1,615 Mil.
Total Current Liabilities was $2,652 Mil.
Long-Term Debt was $1,996 Mil.
Net Income was 228.424860562 + 189.120868833 + 247.479977454 + 245.294662141 = $910 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 228.182885074 + 7.37290515869 + 415.525174009 + 293.399904631 = $944 Mil.
|Accounts Receivable was $1,402 Mil.
Revenue was 2088.57446268 + 1919.35735455 + 2026.94015001 + 1869.18335901 = $7,904 Mil.
Gross Profit was 802.883680582 + 747.30931212 + 675.952854737 + 745.608628659 = $2,972 Mil.
Total Current Assets was $2,955 Mil.
Total Assets was $10,577 Mil.
Property, Plant and Equipment(Net PPE) was $1,009 Mil.
Depreciation, Depletion and Amortization(DDA) was $161 Mil.
Selling, General & Admin. Expense(SGA) was $1,629 Mil.
Total Current Liabilities was $2,902 Mil.
Long-Term Debt was $2,125 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)|
|=||(1437.69736126 / 7994.33046002)||/||(1401.60636564 / 7904.05532624)|
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)|
|=||(698.553506226 / 7904.05532624)||/||(801.301828125 / 7994.33046002)|
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 - (2949.92317278 + 909.82783444) / 10423.9410548)||/||(1 - (2955.32389058 + 1009.13863504) / 10576.5865478)|
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))|
|=||(160.787139092 / (160.787139092 + 1009.13863504))||/||(165.442867257 / (165.442867257 + 909.82783444))|
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)|
|=||(1614.66122912 / 7994.33046002)||/||(1628.52163552 / 7904.05532624)|
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)|
|=||((1995.69283632 + 2652.0513472) / 10423.9410548)||/||((2125.21874392 + 2902.22707489) / 10576.5865478)|
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|
|=||(910.32036899 - 0||-||944.480868873)||/||10423.9410548|
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 -2.47 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