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GuruFocus has detected 3 Warning Signs with Assa Abloy AB $ASAZY.
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Assa Abloy AB (OTCPK:ASAZY)
Beneish M-Score
-2.50 (As of Today)

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.

Assa Abloy AB has a M-score of -2.58 suggests that the company is not a manipulator.

ASAZY' s Beneish M-Score Range Over the Past 10 Years
Min: -3.15   Max: -2.27
Current: -2.5

-3.15
-2.27

During the past 13 years, the highest Beneish M-Score of Assa Abloy AB was -2.27. The lowest was -3.15. And the median was -2.45.


Definition

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 * 0.9676+0.528 * 1.0215+0.404 * 1.0068+0.892 * 1.0242+0.115 * 0.9186
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.069+4.679 * -0.0186-0.327 * 0.9801
=-2.58

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $1,374 Mil.
Revenue was 2116.21592267 + 2112.85766197 + 2154.78727888 + 1905.53277214 = $8,289 Mil.
Gross Profit was 706.962094059 + 836.820574135 + 846.669797575 + 754.850468859 = $3,145 Mil.
Total Current Assets was $2,827 Mil.
Total Assets was $10,349 Mil.
Property, Plant and Equipment(Net PPE) was $1,752 Mil.
Depreciation, Depletion and Amortization(DDA) was $184 Mil.
Selling, General & Admin. Expense(SGA) was $1,760 Mil.
Total Current Liabilities was $2,402 Mil.
Long-Term Debt was $1,836 Mil.
Net Income was 93.9502552406 + 248.73697413 + 243.96999145 + 196.417008418 = $783 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 452.699033344 + 302.071245209 + 287.080187373 + -66.4316377677 = $975 Mil.
Accounts Receivable was $1,386 Mil.
Revenue was 2154.51270338 + 2087.64149703 + 2066.71264201 + 1784.94522985 = $8,094 Mil.
Gross Profit was 829.54625727 + 807.803105464 + 801.301828125 + 698.553506226 = $3,137 Mil.
Total Current Assets was $2,747 Mil.
Total Assets was $10,146 Mil.
Property, Plant and Equipment(Net PPE) was $1,781 Mil.
Depreciation, Depletion and Amortization(DDA) was $170 Mil.
Selling, General & Admin. Expense(SGA) was $1,607 Mil.
Total Current Liabilities was $2,406 Mil.
Long-Term Debt was $1,833 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(1373.73737374 / 8289.39363566) / (1386.30530505 / 8093.81207227)
=0.1657223 / 0.17127965
=0.9676

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(3137.20469708 / 8093.81207227) / (3145.30293463 / 8289.39363566)
=0.38760533 / 0.37943703
=1.0215

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (2826.65363311 + 1752.03649397) / 10348.864994) / (1 - (2746.70936448 + 1780.59290306) / 10145.871106)
=0.55756596 / 0.55377885
=1.0068

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=8289.39363566 / 8093.81207227
=1.0242

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))
=(170.343977416 / (170.343977416 + 1780.59290306)) / (184.014519619 / (184.014519619 + 1752.03649397))
=0.08731394 / 0.09504632
=0.9186

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)
=(1759.9464422 / 8289.39363566) / (1607.43331146 / 8093.81207227)
=0.21231305 / 0.19860028
=1.069

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)
=((1835.66851309 + 2401.65091778) / 10348.864994) / ((1832.86632603 + 2405.51931997) / 10145.871106)
=0.40944774 / 0.41774487
=0.9801

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(783.074229239 - 0 - 975.418828158) / 10348.864994
=-0.0186

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 -2.58 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Assa Abloy AB Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.93671.10850.87830.94581.09040.97831.08551.05920.92771.026
GMI 0.87461.10310.98880.93591.12560.90551.04160.98410.9951.0244
AQI 0.97231.00781.04331.06981.03291.02851.01180.9960.87641.0068
SGI 1.1380.83911.12681.09721.13431.15991.04961.0041.0760.9658
DEPI 1.02651.08470.86740.99631.01740.97821.15831.02641.51410.9702
SGAI 0.9810.98750.99180.94390.97411.00741.00910.96390.99321.0619
LVGI 0.96690.980.96220.89951.09921.00120.98280.94670.96180.9801
TATA -0.0136-0.0435-0.0774-0.037-0.027-0.0138-0.0221-0.003-0.0102-0.0202
M-score -2.54-2.65-2.83-2.58-2.35-2.46-2.41-2.42-2.51-2.57

Assa Abloy AB Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.02520.97090.94131.01421.05751.00521.02851.0350.98690.9676
GMI 1.06160.98390.97710.97140.96420.99530.99330.99210.98671.0215
AQI 0.99540.9960.99971.00731.01520.87641.00230.99860.9971.0068
SGI 1.11421.09531.04461.01140.98970.9931.02471.03851.03881.0242
DEPI 1.06570.9490.91610.89320.89791.62750.90830.96990.95540.9186
SGAI 0.8690.97670.97930.98030.99060.98090.99380.99741.01161.069
LVGI 1.01770.94670.92350.9380.94830.96180.99510.99560.97840.9801
TATA -0.0090-0.0056-0.0033-0.0077-0.0104-0.0024-0.0062-0.0024-0.0186
M-score -2.34-2.42-2.51-2.47-2.48-2.49-2.45-2.45-2.48-2.58
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